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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Year Ended: DECEMBER 31, 1997 Commission File Number: 0-19334
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OUTBACK STEAKHOUSE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 59-3061413
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
550 NORTH REO STREET, SUITE 200, TAMPA, FLORIDA 33609
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(Address of principal executive offices) (Zip Code)
(813) 282-1225
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE.
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in Definitive Proxy or Information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of March 18, 1998, the aggregate market value of the voting stock
held by nonaffiliates of the Registrant was $1,427,993,964.
As of March 18, 1998, the number of shares outstanding of the
Registrant's Common Stock, $.01 par value was 48,559,385.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1997 are incorporated by reference in Part II, hereof.
Portions of the Registrant's Proxy Statement of Outback Steakhouse, Inc. ("the
Proxy Statement") dated March 13, 1998 for the Annual Meeting of Shareholders to
be held on April 15, 1998 are incorporated by reference in Parts I and III,
hereof.
PART I
ITEM 1. BUSINESS
GENERAL
The Company was incorporated in October 1987 as Multi-Venture Partners,
Inc., a Florida corporation, and in January 1990 the Company changed its name to
Outback Steakhouse, Inc. ("Outback Florida"). Outback Steakhouse, Inc., a
Delaware corporation ("Outback Delaware"), was formed in April 1991 as part of a
corporate reorganization completed in June 1991 in connection with the Company's
initial public offering, as a result of which Outback Delaware became a holding
company for Outback Florida. Carrabba's Italian Grill, Inc. ("CIGI"), a Florida
corporation, was formed in January 1995. Unless the context requires otherwise,
references to the "Company" mean Outback Delaware, its wholly owned subsidiaries
Outback Florida, CIGI and each of the limited partnerships and joint ventures
controlled by the Company.
In April 1993, the Company purchased a 50% interest in the cash flows of two
Carrabba's Italian Grill restaurants located in Houston, Texas (the "Original
Restaurants"), and entered into a 50-50 joint venture with the founders of
Carrabba's to develop additional Carrabba's Italian Grill restaurants
("Carrabba's"). In January 1995, the founders obtained sole ownership of the
Original Restaurants ("Carrabba's"), and the Company obtained sole ownership of
the Carrabba's concept and the four restaurants in Florida. The original 50-50
joint venture continues to develop restaurants in the State of Texas. The
Company has sole ownership of restaurants outside of Texas, and continues to
develop Carrabba's Italian Grills outside of Texas as Company owned restaurants,
and will pay royalties to the founders ranging from 1.0% to 1.5% of sales of
Carrabba's restaurants opened after 1994.
In the fourth quarter of 1997, the Company recorded a pre-tax charge to earnings
of $26,001,000 which included approximately $23,113,000 for the write down of
certain impaired assets and $2,888,000 related to restaurant closings, severance
and other costs. The write down primarily related to Carrabba's restaurant
properties, nine of which were closed during the fourth quarter of 1997. The
charge is presented in the Company's Consolidated Statements of Income in the
line item "Provision for impaired assets and restaurant closings."
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CONCEPTS AND STRATEGIES
As of December 31, 1997, the Company's restaurant system included 459
full-service restaurants operated under the name Outback Steakhouse, 72 of which
were franchised to unaffiliated domestic franchisees and 14 of which were
franchised to unaffiliated international franchisees. The system also included
60 full-service restaurants operated under the name Carrabba's Italian Grill, 49
of which were Company owned and eleven of which were operated as development
joint ventures. The majority of Outback restaurants serve dinner only and
feature a limited menu of high quality, uniquely seasoned steaks, prime rib,
chops, ribs, chicken, fish and pasta. Outback also offers specialty appetizers,
including the signature "Bloomin' Onion," desserts and full liquor service. The
majority of Carrabba's restaurants serve dinner only and feature a limited menu
of high quality Italian cuisine including a variety of pastas, chicken, seafood,
veal and wood-fired pizza. Carrabba's also offers specialty appetizers,
desserts, coffees and full liquor service. The Company believes that it
differentiates its Outback Steakhouse and Carrabba's restaurants by:
- emphasizing consistently high quality ingredients and
preparation of a limited number of menu items that appeal to a
broad array of tastes;
- featuring generous portions at moderate prices;
- attracting a diverse mix of customers through a casual dining
atmosphere emphasizing highly attentive service;
- hiring and retaining experienced restaurant management by
providing general managers the opportunity to purchase a 10%
interest in the restaurants they manage; and
- limiting service to dinner for the majority of its locations,
(generally from 4:30 p.m. to 11:00 p.m.), which reduces the
hours of restaurant management and employees.
OUTBACK STEAKHOUSE:
Menu. The Outback Steakhouse menu includes several cuts of freshly
prepared, uniquely seasoned and seared steaks, plus prime rib, barbecued ribs,
pork chops, chicken, seafood and pasta. The menu is designed to have a limited
number of selections to permit the greatest attention to quality while offering
sufficient breadth to appeal to all taste preferences. The Company tests new
menu items to replace slower-selling items and regularly upgrades ingredients
and cooking methods to improve quality and consistency of its food offerings.
The menu also includes several specialty appetizers and desserts, together with
full bar service featuring Australian beer and wine. Liquor service accounts for
approximately 14% of Outback Steakhouses' revenues. The price range of
appetizers is $1.99 to $6.99 and the price range of entrees is $8.79 to $21.99.
The average check per person was $16.76 during 1997. Outback Steakhouses also
offer a low-priced
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children's menu, and certain Outback Steakhouses also offer a separate menu
offering larger portions of prime beef with prices ranging from $16.99 to
$23.99.
Casual Atmosphere. Outback Steakhouses feature a casual dining
atmosphere with a decor suggestive of the rustic atmosphere of the Australian
outback. The decor includes blond woods, large booths and tables and Australian
memorabilia such as boomerangs, surfboards, maps and flags.
Restaurant Management and Employees. The general manager of each
Outback is provided the opportunity to purchase a 10% interest in the restaurant
he or she manages for $25,000, and is required to enter into a five-year
employment agreement. By requiring this level of commitment and by providing the
general manager with a significant stake in the success of the restaurant, the
Company believes that it is able to attract and retain experienced and highly
motivated managers. In addition, since the Company's restaurants are generally
open for dinner only, the Company believes that it has an advantage in
attracting and retaining servers, food preparers and other employees who find
the shorter hours an attractive life-style alternative to restaurants serving
both lunch and dinner.
CARRABBA'S ITALIAN GRILL:
Menu. The Carrabba's Italian Grill menu includes several types of
uniquely prepared Italian dishes including pastas, chicken, seafood, wood-fired
pizza and veal. The menu is designed to have a limited number of selections to
permit the greatest attention to quality while offering sufficient breadth to
appeal to all taste preferences. The Company tests new menu items to replace
slower-selling items and regularly upgrades ingredients and cooking methods to
improve quality and consistency of its food offerings. The menu also includes
several specialty appetizers, desserts, and coffees, together with full bar
service featuring Italian wines and specialty drinks. Liquor service accounts
for approximately 16.7% of Carrabba's revenues. The price range of appetizers is
$2.29 to $8.99 and the price range of entrees is $6.99 to $15.99. The average
check per person was $17.14 during 1997.
Casual Atmosphere. Carrabba's Italian Grills feature a casual dining
atmosphere with a decor suggestive of a traditional Italian exhibition kitchen
where customers can watch their meals prepared. The decor includes dark woods,
large booths and tables and Italian memorabilia featuring Carrabba's family
photos, authentic Italian pottery and cooking utensils.
Restaurant Management and Employees. The general manager of each
Carrabba's Italian Grill is provided the opportunity to purchase a 10% interest
in the restaurant he or she manages for $25,000 and is required to enter into a
five-year employment agreement. By requiring this level of commitment and by
providing the general manager with a significant stake in the success of the
restaurant, the Company believes that it is able to attract and retain
experienced and highly motivated managers. In addition, since the Company's
restaurants are generally open for dinner only, the Company believes that it has
an advantage in attracting and retaining
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servers, food preparers and other employees who find the shorter hours an
attractive life-style alternative to restaurants serving both lunch and dinner.
EXPANSION STRATEGY
During the year ended December 31, 1997, 86 Outback Steakhouses and 21
Carrabba's Italian Grills were added to the Company's restaurant system. In the
fourth quarter of 1997, the Company closed nine of its Carrabba's locations in
markets that did not respond positively to increased advertising and other
strategies implemented to stimulate sales. In 1998 and 1999, the Company expects
to develop eight to ten Carrabba's restaurants, the majority of which will be
Company owned, in existing markets where it has demonstrated success. The
Company expects to open 80 to 95 Outback Steakhouse restaurants in 1998 and 1999
of which 50 to 55 are expected to be Company owned, 15 to 20 of which are
expected to be operated by domestic franchisees, and 15 to 20 of which are
expected to be operated by international franchisees. During 1998, the Company
expects to develop new Outbacks in its existing markets and in select new
domestic and international markets including locations in Hawaii, Cayman
Islands, Bahamas, Argentina, Peru, Mexico, Dominican Republic, Philippines and
Germany.
The above statements regarding the Company's expansion plans constitute
forward looking statements. The Company notes that a variety of factors could
cause the actual results and experience to differ from the anticipated results
referred to above. The Company's development schedule for new restaurant
openings is subject to a number of risk factors that could cause actual results
to differ, including:
(i) Ability to secure appropriate real estate sites at acceptable
prices;
(ii) Ability to obtain all required governmental permits including
zoning approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which
could result in significant delays;
(iv) Ability to secure all necessary contractors and sub-
contractors;
(v) Union activities such as picketing and hand billing which
could delay construction;
(vi) Weather and acts of God beyond the Company's control resulting
in construction delays.
The Company utilizes controlled partnerships, in which the Company owns
51% to 90%, for the development of restaurants in order to attract experienced
restaurant operators and to provide them with the incentive to actively
supervise the development and operation of several restaurants in a particular
market.
The Company also utilizes development joint ventures, in which the
Company owns 50% and its joint venture partner owns 50%, for select Carrabba's
Italian Grills located in Florida and Texas.
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Site Selection. The Company currently leases approximately 45% of its
restaurant sites. In the future, the Company expects to construct a significant
number of free standing restaurants on owned or leased sites. The Company's
leased sites are generally located in strip shopping centers. The Company
expects 80% to 90% of new restaurants to be free standing locations. The Company
considers the location of a restaurant to be critical to its long-term success
and devotes significant effort to the investigation and evaluation of potential
sites. The site selection process focuses on trade area demographics, such as
visibility, accessibility and traffic volume. The Company also reviews potential
competition and the profitability of national chain restaurants operating in the
area. Senior management inspects and approves each restaurant site. It takes
approximately 90 to 180 days to complete construction and open a new restaurant.
The Company designs the interior of its restaurants in-house and utilizes
outside architects when necessary. A typical Outback Steakhouse is approximately
6,200 square feet and features a dining room and an island, full-service liquor
bar. The dining area of a typical Outback consists of 35 to 38 tables and seats
approximately 210 people. The bar area consists of six to nine tables and has
seating capacity for approximately 35 people. Appetizers and complete dinners
are served in the bar area.
A typical Carrabba's Italian Grill is approximately 6,200 square feet
and features a dining room, pasta bar and an island, full service liquor bar.
The dining area of a typical Carrabba's Italian Grill consists of 34 to 36
tables and seats approximately 160 people. The liquor bar area includes eight
tables and seating capacity for approximately 52 people, and the pasta bar has
seating capacity for approximately 12 people. Appetizers and complete dinners
are served in both the pasta bar and liquor bar.
RESTAURANT LOCATIONS
The following table sets forth the location of each existing Outback
Steakhouse as of December 31, 1997:
<TABLE>
<CAPTION>
UNAFFILIATED UNAFFILIATED
COMPANY OWNED DOMESTIC FRANCHISED INTERNATIONAL
RESTAURANTS RESTAURANTS FRANCHISED RESTAURANTS
------------- ------------- ------------------------
<S> <C> <C> <C>
Arizona (5) Nebraska (3) Alabama (9) Alberta, Canada (1)
Arkansas (3) Nevada (7) Alaska (1) Aruba (1)
Colorado (11) New Jersey (10) California (30) Cancun, Mexico (1)
Delaware (1) New Mexico (2) Connecticut(3) Guam (1)
Florida (54) New York (14) Florida (1) Hawaii (1)
Georgia (21) North Carolina (19) Idaho (1) Ontario, Canada (4)
Illinois (14) Ohio (21) Massachusetts (6) Philipinnes (1)
Indiana (13) Oklahoma (7) Mississippi (5) Puerto Rico (1)
Iowa (4) Pennsylvania (10) New Hampshire (1) Rio de Janeiro, Brazil(1)
Kansas (4) South Carolina (11) Oregon (2) Seoul, Korea (2)
Kentucky (7) Tennessee(11) Rhode Island (1)
Louisiana (11) Texas (37) Tennessee (2)
Maryland (11) Utah (3) Washington (10)
Michigan (16) Virginia (23)
Minnesota (3) West Virginia (6)
Missouri (9) Wisconsin (2)
</TABLE>
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The following table sets forth the location of each existing Carrabba's
Italian Grill as of December 31, 1997:
<TABLE>
<CAPTION>
COMPANY OWNED DEVELOPMENT JOINT
RESTAURANTS VENTURE RESTAURANTS
- ---------------- -------------------
<S> <C>
Arizona (2) Florida (2)
Colorado (6) Texas (9)
Georgia (5)
Florida (23)
Maryland (2)
New Jersey (3)
New Mexico (2)
North Carolina (4)
Pennsylvania (1)
Virginia (1)
</TABLE>
RESTAURANT OPERATIONS
Management and Employees. The management staff of a typical Outback
Steakhouse or Carrabba's Italian Grill consists of one general manager, one
assistant manager and one kitchen manager. Each restaurant also employs
approximately 50 to 70 hourly employees, many of whom work part-time. The
general manager of each restaurant has primary responsibility for the day-to-day
operation of his or her restaurant and is required to abide by Company
established operating standards.
Purchasing. The Company's management negotiates directly with suppliers
for most food and beverage products to ensure uniform quality and adequate
supplies and to obtain competitive prices. The Company and its franchisees
purchase substantially all food and beverage products from authorized local or
national suppliers and the Company will periodically make advance purchases of
various inventory items to ensure adequate supply or obtain favorable pricing.
The Company currently purchases substantially all of its beef from three
suppliers. The Company believes that beef of comparable quality, as well as all
other essential food and beverage products are available, or upon short notice
can be made available from alternative qualified suppliers.
Supervision and Training. The Company requires its area operating
partners and restaurant general managers to have significant experience in the
full-service restaurant industry. In addition, the Company has developed a
comprehensive 12-week training course which all operating partners and general
managers are required to complete. The program emphasizes the Company's
operating strategy, procedures and standards. The Company's senior management
meets quarterly with the Company's operating partners to discuss
business-related issues and share ideas. In addition, members of senior
management regularly visit the restaurants to ensure that the Company's concept,
strategy and standards of quality are being adhered to in all aspects of
restaurant operations.
The restaurant general manager and area operating partners, together
with the Company's President, Regional Vice Presidents, Vice President of
Training and Director of Training, are responsible for selecting and training
the employees for each new restaurant. The training period for new employees
lasts approximately one week and is characterized by on-the-job supervision by
an experienced employee. Ongoing employee training remains the responsibility of
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the restaurant manager. Written tests and observation in the work place are used
to evaluate each employee's performance. Special emphasis is placed on the
consistency and quality of food preparation and service which is monitored
through monthly meetings between kitchen managers and senior management.
Advertising and Marketing. The Company uses radio and television
advertising in selected markets where it is cost-effective. The Company's goal
is to develop a sufficient number of restaurants in each market it serves to
permit the cost-effective use of radio and television advertising. In addition,
the Company engages in a variety of promotional activities, such as contributing
goods, time and money to charitable, civic and cultural programs, in order to
increase public awareness of the Company's restaurants.
GENERAL MANAGER PROGRAM
The general manager of each Company owned restaurant is required, as a
condition of employment, to sign a five-year employment agreement and is given
the opportunity to purchase a 10% interest in the restaurant he or she is
employed to manage. The Company requires each new unaffiliated franchisee to
provide the same opportunity to the general manager of each new restaurant
opened by that franchisee. To date, the purchase price for the 10% interest has
been fixed at $25,000. During the five-year employment term, each general
manager is prohibited from selling or otherwise transferring his 10% interest,
and after the five-year term of employment, any sale or transfer of that
interest is subject to certain rights of first refusal. In addition, each
general manager is required to sell his 10% interest to his employer or its
general partners upon termination of employment on terms set forth in his
employment agreement. The Company intends to continue the general manager
investment program.
OWNERSHIP STRUCTURES
The Company's ownership interests in Outback Steakhouse restaurants and
Carrabba's Italian Grills are divided into two basic categories: (i) Company
owned restaurants which are owned directly by the Company, by limited
partnerships or by controlled joint ventures, and (ii) development joint
ventures. The results of operations of Company owned restaurants are included in
the Company's Consolidated Statements of Income, and the results of operations
of restaurants owned by development joint ventures are accounted for using the
equity method of accounting.
COMPETITION
The restaurant industry is intensely competitive with respect to price,
service, location and food quality, and there are many well-established
competitors with substantially greater financial and other resources than the
Company. Some of the Company's competitors have been in existence for a
substantially longer period than the Company and may be better established in
the markets where the Company's restaurants are or may be located. The
restaurant business is often affected by changes in consumer tastes, national,
regional or local economic conditions, demographic trends, traffic patterns and
the type, number and location of competing restaurants. In addition, factors
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such as inflation, increased food, labor and benefits costs and the availability
of experienced management and hourly employees may adversely affect the
restaurant industry in general and the Company's restaurants in particular.
UNAFFILIATED FRANCHISE PROGRAM
At December 31, 1997, there were 72 domestic franchised Outback
Steakhouses and 14 international franchised Outback Steakhouses. Each domestic
franchisee paid an initial franchise fee of $40,000 for each restaurant and pays
a continuing monthly royalty of 3% of gross restaurant sales and a monthly
marketing administration fee of 0.5% of gross restaurant sales. In addition,
until such time as the Company establishes a national advertising fund or a
regional advertising cooperative, all franchisees are required to expend, on a
monthly basis, a minimum of 3% of gross restaurant sales on local advertising.
Once the Company establishes a national advertising fund or a regional
advertising cooperative, covered domestic franchisees will be required to
contribute, on a monthly basis, 3.5% of gross restaurant sales to the fund or
cooperative in lieu of local advertising. Initial fees and royalties for
international franchisees vary by market. There were no agreements to franchise
Carrabba's Italian Grills at December 31, 1997.
All unaffiliated franchisees are required to operate their Outback
Steakhouse restaurants in compliance with the Company's methods, standards and
specifications regarding such matters as menu items, ingredients, materials,
supplies, services, fixtures, furnishings, decor and signs although the
franchisee has full discretion to determine the prices to be charged to
customers. In addition, all franchisees are required to purchase all food,
ingredients, supplies and materials from suppliers approved by the Company.
EMPLOYEES
The Company employs approximately 34,600 persons, 201 of whom are
corporate personnel employed by Outback Steakhouse, Carrabba's, and Outback
Steakhouses International franchising group. Approximately 1600 are restaurant
management personnel and the remainder are hourly restaurant personnel. Of the
201 corporate employees, 18 are in management and 182 are administrative or
office employees. None of the Company's employees is covered by a collective
bargaining agreement.
TRADEMARKS
The Company regards its Outback Steakhouse service mark, its Carrabba's
Italian Grill service mark and its "Bloomin' Onion" trademark as having
significant value and as being important factors in the marketing of its
restaurants. The Company has also obtained a trademark for several other of its
Outback menu items, and the "No Rules. Just Right." and "Aussie Mood. Awesome
Food." advertising slogans. The Company is aware of names and marks similar to
the service mark of the Company used by other persons in certain geographic
areas in which the Company has restaurants. However, the Company believes such
uses will not adversely affect the Company. The Company's policy is to pursue
registration of its marks whenever possible and to oppose vigorously any
infringement of its marks.
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GOVERNMENT REGULATION
The Company is subject to various federal, state and local laws
affecting its business. Each of the Company's restaurants is subject to
licensing and regulation by a number of governmental authorities, which may
include alcoholic beverage control, health and safety and fire agencies in the
state or municipality in which the restaurant is located. Difficulties in
obtaining or failures to obtain the required licenses or approvals could delay
or prevent the development of a new restaurant in a particular area.
Approximately 14.2% of the Company's revenues is attributable to the
sale of alcoholic beverages. Alcoholic beverage control regulations require each
of the Company's restaurants to apply to a state authority and, in certain
locations, county or municipal authorities for a license or permit to sell
alcoholic beverages on the premises and to provide service for extended hours
and on Sundays. Typically, licenses must be renewed annually and may be revoked
or suspended for cause at any time. Alcoholic beverage control regulations
relate to numerous aspects of daily operations of the Company's restaurants,
including minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing, inventory control and handling, storage and dispensing of
alcoholic beverages. The failure of a restaurant to obtain or retain liquor or
food service licenses would adversely affect the restaurant's operations.
The Company may be subject in certain states to "dram-shop" statutes,
which generally provide a person injured by an intoxicated person the right to
recover damages from an establishment which wrongfully served alcoholic
beverages to the intoxicated person. The Company carries liquor liability
coverage as part of its existing comprehensive general liability insurance and
has never been named as a defendant in a lawsuit involving "dram-shop" statutes.
The Company's restaurant operations are also subject to federal and
state minimum wage laws governing such matters as working conditions, overtime
and tip credits. Significant numbers of the Company's food service and
preparation personnel are paid at rates related to the federal minimum wage and,
accordingly, further increases in the minimum wage could increase the Company's
labor costs.
The Americans With Disabilities Act prohibits discrimination in
employment and public accommodations on the basis of disability. The Act became
effective in January 1992 with respect to public accommodation and July 1992
with respect to employment. Under the Act, the Company could be required to
expend funds to modify its restaurant to provide service to, or make reasonable
accommodations for the employment of, disabled persons.
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ITEM 2. PROPERTIES
Approximately 45% of the Company's restaurants are located in leased
space. In the future, the Company intends to continue to construct and own a
significant number of new restaurants on owned or leased land. Initial lease
expirations primarily range from five to ten years, with the majority of the
leases providing for an option to renew for at least one additional term. All of
the Company's leases provide for a minimum annual rent, and most leases call for
additional rent based on sales volume at the particular location over specified
minimum levels. Generally, the leases are net leases which require the Company
to pay the costs of insurance, taxes and a portion of lessors' operating costs.
See page 7 for listing of restaurant locations.
The Company's executive offices are located in approximately 25,800
square feet of leased space in Tampa, Florida, under a lease expiring in 1999.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any litigation other than routine matters
which are incidental to the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
There were no matters submitted for vote of security holders during the
fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCK MATTERS
Filed herewith as Exhibit 13.03 and incorporated herein by reference.
DIVIDEND POLICY:
The Company has never paid a cash dividend on its Common Stock. The
Board of Directors intends to retain earnings of the Company to support
operations and to finance expansion and does not intend to pay cash dividends on
Common Stock for the foreseeable future. As a condition of the Company's
revolving line of credit, the Company is currently restricted from paying
dividends, other than in the form of partnership distributions, without the
consent of two-thirds of its lenders. The payment of cash dividends in the
future will depend upon such factors as earnings levels, capital requirements,
the Company's financial condition and other factors deemed relevant by the Board
of Directors.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- --------
(Dollar amounts in thousands,
except per share data)
<S> <C> <C> <C> <C> <C>
Statements of Income Data:
Revenues ............................... $1,151,637 $937,400 $733,692 $516,926 $336,885
---------- -------- -------- -------- --------
Cost of revenues ....................... 440,172 363,285 286,762 202,250 132,863
Labor and other related expenses ....... 272,199 214,038 163,747 110,787 72,122
Restaurant operating expenses .......... 251,959 195,229 150,409 108,952 72,253
General & administrative expenses ...... 43,763 33,829 26,175 18,996 13,328
Provision for impaired assets and
restaurant closings (1) .............. 26,001
Loss (income) from operations of
unconsolidated affiliates ............ 467 102 (442) (1,269) (333)
---------- -------- -------- -------- --------
Total costs and expenses ............... 1,034,561 806,483 626,651 439,716 290,233
---------- -------- -------- -------- --------
Income from operations ................. 117,076 130,917 107,041 77,210 46,652
Interest income (expense), net ......... (2,489) (1,096) (1,375) (302) 1,077
---------- -------- -------- -------- --------
Income before elimination of
minority partners' interest
and income taxes ..................... 114,587 129,821 105,666 76,908 47,729
Elimination of minority
partners' interest ................... 19,411 17,925 15,181 11,930 7,526
---------- -------- -------- -------- --------
Income before income taxes ............. 95,176 111,896 90,485 64,978 40,203
Provision for income taxes ............. 33,724 40,283 29,167 21,602 13,922
---------- -------- -------- -------- --------
Net income ............................. $ 61,452 $ 71,613 $ 61,318 $ 43,376 $ 26,281
========== ======== ======== ======== ========
Basic earnings per common share ........ $ 1.28 $ 1.50 $ 1.30 $ 0.94 $ 0.57
========== ======== ======== ======== ========
Diluted earnings per common share ...... $ 1.27 $ 1.45 $ 1.25 $ 0.91 $ 0.56
========== ======== ======== ======== ========
Pro forma net income (2) ............... $ 57,911 $ 41,196 $ 24,926
======== ======== ========
Pro forma basic earnings per common
share (2) ............................ $ 1.23 $ 0.89 $ 0.54
======== ======== ========
Pro forma diluted earnings per
common share (2) ..................... $ 1.19 $ 0.86 $ 0.53
======== ======== ========
Basic weighted average number of
common shares outstanding ............ 47,834 47,813 47,012 46,355 46,009
Diluted weighted average number of
common shares outstanding ............. 48,505 49,289 48,877 47,674 46,957
Balance Sheet Data:
Working capital (deficiency) ........... $ (539) $(31,745) $(10,883) $ 19,273 $ 18,947
Total assets ........................... 592,780 469,843 372,271 259,118 174,794
Long-term debt ......................... 68,276 47,595 37,905 20,699 11,718
Interest of minority partners in
consolidated partnerships ............ 4,497 1,569 2,698 2,477 1,576
Stockholders' equity ................... 434,717 342,439 266,764 186,697 135,059
</TABLE>
(1) Amount includes approximately $23,113,000 for the write down of certain
impaired assets and $2,888,000 related to restaurant closings, severance and
other costs. The write down primarily related to Carrabba's restaurant
properties, nine of which were closed in the fourth quarter of 1997.
(2) In 1995 and 1996, the Company issued shares of its Common Stock to five of
its franchisees in exchange for all of their outstanding interests in Outback
Steakhouses located in Oklahoma, Nebraska, Arkansas, Kansas, Ohio, Kentucky,
Virginia, Illinois, Missouri and Tennessee. Pro forma amounts include an
adjustment to increase the provision for income taxes to reflect the anticipated
tax as if the merging Companies had not elected to be taxed under Subchapter S
of the Internal Revenue Code. See Notes 11 and 12 of Notes to Consolidated
Financial Statements of the Company's 1997 annual report to shareholders.
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Filed as Exhibit 13.01 and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Independent Auditors' Report and Consolidated Financial Statements
of the Company are filed herewith as Exhibit 13.02 and are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
<PAGE> 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item concerning the Company's
executive officers and directors is incorporated herein by reference to the
information set forth under the section entitled "Election of Directors" and
"Beneficial Owners and Management" in the Company's Definitive Proxy Statement
dated March 13, 1998.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Executive
Compensation" in the Company's Definitive Proxy Statement dated March 13, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Beneficial
Owners and Management" in the Company's Definitive Proxy Statement dated March
13, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Compensation
Committee Interlocks and Insider Participation" in the Company's Definitive
Proxy Statement dated March 13, 1998.
14
<PAGE> 15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)(1) LISTING OF FINANCIAL STATEMENTS
The following consolidated financial statements of the Registrant and
subsidiaries, included in the Registrant's Annual Report to
Shareholders, are incorporated by reference in Item 8:
Consolidated Balance Sheets -
December 31, 1997 and 1996
Consolidated Statements of Income -
Years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity -
Years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows Years ended December 31,
1997, 1996, and 1995
Notes to Consolidated Financial Statements
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K with the Securities and Exchange
Commission dated November 17, 1997.
(c) FINANCIAL STATEMENT SCHEDULES
None.
15
<PAGE> 16
(d) EXHIBITS
The exhibits in response to this portion of Item 14 are listed below.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
3.01 Certificate of Incorporation of the Company (included as an exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
3.02 By-laws of the Company (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
4.01 Specimen Stock Certificate (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
4.02 Agreement and Plan of Reorganization dated December 18, 1991 among
Outback Delaware, Outback Florida, American Restaurants of South
Florida, Inc. ("ARSF") and the stockholders of ARSF (included as an
exhibit to Registrant's Registration Statement on Form S-1, No.33-
44452, and incorporated herein by reference)
4.03 Agreement and Plan of Reorganization dated July 1, 1992 among Outback
Delaware, Outback Florida, Stone Danker, Inc. ("SDI") and the
stockholders of SDI (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-49586 and incorporated
herein by reference)
4.04 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, Florida Summit Corporation ("Summit") and
the stockholders of Summit (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31,1992 and
incorporated herein by reference)
4.05 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, Grantham Group, Inc. (Grantham Group") and
the stockholders of Grantham Group (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December
31,1992 and incorporated herein by reference)
4.06 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, F & B, Inc. ("F & B") FT & B
Enterprises/Ohio, Inc. ("FT & B"), Taste Buds, Inc. ("Taste Buds"),
Taste Buds of St. Matthews, Ltd., the stockholders of F & B, FT & B,
and Taste Buds, and the partners of Taste Buds of St. Matthews, Ltd
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1992 and incorporated herein by reference)
4.07 Joint Venture Agreement dated March 31, 1993 between Outback/Carrabba,
Inc. and Mangia Beve, Inc. (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31,1993 and
incorporated herein by reference)
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
4.08 Agreement and Plan of Reorganization Among Outback Steakhouse, Inc.,
Outback Steakhouse of Florida, Inc., Aussie Enterprises, Inc., Attinger
& Associates, Inc., Aussie of Louisiana, L.L.P., Aussie of Baton Rouge
No. 1901, L.L.C., Aussie of New Orleans No. 1911, L.L.C., Aussie of
Lafayette No. 1921, L.L.C., Aussie of Shreveport No. 1931, L.L.C.,
Aussie of Slidell No. 1912, L.L.C., Braxton I. Moody, IV and Bruce
Attinger (included as an exhibit to Registrant's Report on Form 10-Q
for the quarter ended March 31, 1994 and incorporated herein by
reference)
4.09 Agreement and Plan of Reorganization dated May 18, 1994 Among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Hugh Connerty,
Carl Sahlsten, Ridge Sink, Michael Coble, and the Partnerships and
their respective General Partners (included as an exhibit to
Registrant's Report on Form 10-Q/A for the quarter ended March 31, 1994
and incorporated herein by reference)
4.10 Royalty Agreement dated April 1995 among Carrabba's Italian Grill,
Inc., Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc.,
Carrabba Woodway, Inc., John C. Carrabba, III, Damian C. Mandola, and
John C. Carrabba, Jr. (included as an exhibit to Registrant's Report on
Form 10-Q for the quarter ended March 31, 1995 and incorporated herein
by reference)
4.11 Reorganization Agreement dated January 1, 1995 among Carrabba/Outback
Joint Venture, Outback/Carrabba, Inc., Outback Steakhouse, Inc., Mangia
Beve, Inc., Carrabba, Inc., Carrabba's of Woodway, Inc., John C.
Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr. (included
as an exhibit to Registrant's Report on Form 10-Q for the quarter ended
March 31, 1995 and incorporated herein by reference)
4.12 Agreement and Plan of Reorganization dated March 24, 1995 among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc.,
Fioretti-Theisen, Inc., and Charles E. Fioretti (included as an exhibit
to Registrant's Registration Statement on Form S-3, No. 33-95498, and
incorporated herein by reference)
4.13 Agreement and Plan of Reorganization dated July 31, 1995 among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., G'Day, Inc.,
Donald R. Everts, and Claire E. Everts (included as an exhibit to
Registrant's Registration Statement on Form S-3, No. 33-97166, and
incorporated herein by reference)
4.14 Agreement for Sale and Purchase of Partnership Interest among Outback
Steakhouse, Inc., Shlemon, Inc. and Steve Shlemon (included as an
exhibit to Registrant's Registration Statement on Form S-3,
No.333-00176, and incorporated herein by reference)
4.15 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Hal W.
Smith, William E. Rosenthal, Geoff Alston, David M. Brauckmann, Don
Elliot, Joseph C. Penshorn, Waymon D. Williams, Williams J. Bishop, Dan
Trierweiler, OB-Little Rock, Inc., Lane Resources Trust (included as an
exhibit to Registrant's Report on Form 8-K dated December 31, 1995 and
incorporated herein by reference)
4.16 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Michael
Duty, Robert Krug, Henry Harris, Kent Little (included as an exhibit to
Registrant's Report on
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
Form 8-K dated December 31, 1995 and incorporated herein by reference)
4.17 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Frank
Attinger, Kevin A. Rowell, F. Beaven Smith (included as an exhibit to
Registrant's Report on Form 8-K dated December 31, 1995 and
incorporated herein by reference)
4.18 Agreement and Plan of Reorganization dated February 2, 1996 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Robert
Frey, Ronald Sock, David Ferry, Joseph Sumislawski, FMI Restaurants,
Inc., Fore Management West End, Inc., Fore Management, Inc. and Fore
Management Leasing , L.P. (included as an exhibit to Registrant's
Report on Form 8-K/A dated December 31, 1995 and incorporated herein by
reference)
4.19 Agreement and Plan of Reorganization dated February 2, 1996 among
Outback Steakhouse, Inc., Eric P. Bachelor, Brenica Restaurant Group,
Inc., First Four Group, Inc., and various partners (included as an
exhibit to Registrant's Registration Statement on Form S-3, No.
333-4674, and incorporated herein by reference)
4.20 Agreement and Plan of Reorganization, dated May 28, 1996, among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Nevada Summit
Corporation, and Anthony P. Grappo (included as Exhibit 2.2 to
Registration Statement on Form S-3, No. 333-14597, and incorporated
herein by reference)
4.21 Agreement and Plan of Reorganization among Outback Steakhouse, Inc.,
Outback Steakhouse of Florida, Inc. and Wibel& Associates (included as
Exhibit 2.1 to Registration Statement on Form S-3, No.333-38985, and
incorporated herein by reference)
4.22 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Novello and Associates, Inc.
(filed herewith)
4.23 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Songlines, Inc. (filed
herewith)
4.24 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Stone, Inc. (filed herewith)
4.25 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Hood & Associates, Inc. and
Dennis L. Hood (filed herewith)
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
4.26 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Aaron Restaurant Group, Ltd.
(filed herewith)
10.01 Lease for the Company's executive offices (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-44452, and
incorporated herein by reference)
10.02 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and Chris T. Sullivan (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33- 40255, and
incorporated herein by reference)
10.03 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and Robert D. Basham (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
10.04 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and John Timothy Gannon (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
10.05 Employment Agreement dated February 2, 1988, between Outback Florida
and John Timothy Gannon (included as and exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.06 Employment Agreement dated January 2, 1990, between Outback Florida and
Robert Merritt (included as and exhibit to Registrant's Registration
Statement on Form S-1, No. 33-40255, and incorporated herein by
reference)
10.07 Stock Option Agreement dated January 2, 1990, between Outback Florida
and Robert Merritt (included as and exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.08 Stock Option Plan (included as and exhibit to Registrant's Registration
Statement on Form S-1, No. 33-40255, and incorporated herein by
reference)
10.09 Loan Agreement dated September 14, 1994 between Outback Steakhouse,
Inc. and Barnett Bank of Tampa (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference)
10.10 Employment Agreement dated October, 1990 between Paul Avery and Outback
Florida (included as an exhibit to Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference)
10.11 Stock Option Agreement dated November 30, 1990 between Outback Florida
and Paul Avery (included as an exhibit to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated herein
by reference)
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
10.12 Employment Agreement dated March, 1994 between Outback Florida and
Joseph J. Kadow (included as an exhibit to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.13 Stock Option Agreement dated April 1, 1994 between Outback Florida and
Joseph J. Kadow (included as an exhibit to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.14 Amendment to Lease for the Company's executive offices dates June 10,
1994 (included as an exhibit to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference)
10.15 Amendment to Lease for the Company's executive office dated December
17, 1995 (included as an exhibit to Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein by
reference)
10.16 Stock Purchase Agreement dated July 18, 1995 among Outback Steakhouse,
Inc., Robert D. Basham, J. Timothy Gannon, and Bommerang Air, Inc.
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference)
10.17 First Amendment to Loan Agreement dated August 14, 1995 between Outback
Steakhouse, Inc. and Barnett Bank of Tampa (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference)
10.18 Amended and Restated Revolving Promissory Noted dated August 14, 1995
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included as
an exhibit to Registrant's Annual Report on Form 10- K for the year
ended December 31, 1995 and incorporated herein by reference)
10.19 Second Amendment to Loan Agreement dated May 30, 1996 between Outback
Steakhouse, Inc. and Barnett Bank of Tampa (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996 and incorporated herein by reference)
10.20 Amended and Restated Revolving Promissory Note dated May 30, 1996
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included
as an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference)
10.21 First Amendment to Second Amended and Restated Loan Agreement dated May
30, 1996 between Outback Steakhouse, Inc. and Barnett Bank of Tampa
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference)
10.22 Amended and Restated Commercial Promissory Note dated May 30, 1996
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included
as an exhibit to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference)
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C>
10.23 Credit Agreement dated as of August 22, 1997 among Outback Steakhouse,
Inc., as Borrower, Outback Steakhouse of Florida, Inc., and Carrabba's
Italian Grill, Inc., as Guarantors, The Lenders Identified Herein, as
Lenders and Barnett Bank, N.A., as Agent (filed herewith)
13.01 Management's Discussion and Analysis (filed herewith)
13.02 Independent Auditors' Report and Consolidated Financial Statements
(filed herewith)
13.03 Market for the Registrant's Common Stock and Related Stock Matters
(filed herewith)
21.01 List of Subsidiaries (filed herewith)
23.01 Independent Auditors' Consent (filed herewith)
27.01 Financial Data Schedule (filed herewith)(for SEC use only)
</TABLE>
21
<PAGE> 22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
OUTBACK STEAKHOUSE, INC.
By /s/ Chris T. Sullivan
------------------------------
Chris T. Sullivan, Chairman
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT
AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C> <C>
/s/ Chris T. Sullivan Chairman, Chief Executive March 27, 1998
- ----------------------------------- Officer and Director
Chris T. Sullivan (Principal Executive
Officer)
/s/ Robert S. Merritt Senior Vice President, March 27, 1998
- ----------------------------------- Chief Financial Officer,
Robert S. Merritt Treasurer and Director
(Principal Financial Officer
and Principal Accounting
Officer)
/s/ Robert D. Basham President, Chief Operating March 27, 1998
- ----------------------------------- Officer and Director
Robert D. Basham
Senior Vice President and March , 1998
- ----------------------------------- Director
J. Timothy Gannon
Director March , 1998
- -----------------------------------
John A. Brabson, Jr.
/s/ Charles H. Bridges Director March 27, 1998
- -----------------------------------
Charles H. Bridges
Director March , 1998
- -----------------------------------
W.R. Carey, Jr.
/s/ Edward L. Flom Director March 27, 1998
- -----------------------------------
Edward L. Flom
/s/ Debbi Fields Rose Director March 27, 1998
- -----------------------------------
Debbi Fields Rose
/s/ Nancy Schneid Director March 27, 1998
- -----------------------------------
Nancy Schneid
/s/ Lee Roy Selmon Director March 27, 1998
- -----------------------------------
Lee Roy Selmon
/s/ Toby S. Wilt Director March 27, 1998
- -----------------------------------
Toby S. Wilt
</TABLE>
22
<PAGE> 1
EXHIBIT 4.22
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
AND
NOVELLO & ASSOCIATES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - PLAN OF ACQUISITION...................................................................................1
1.1 The Merger......................................................................................1
1.2 Adjustments.....................................................................................2
1.3 Closing.........................................................................................2
1.4 Execution and Delivery of Closing Documents.....................................................2
1.5 Execution and Filing of Merger Documents........................................................3
1.6 Effectiveness of Merger.........................................................................3
1.7 Further Assurances..............................................................................3
1.8 Certificates....................................................................................3
1.9 Closing of Transfer Books.......................................................................3
1.10 Fractional Shares...............................................................................3
1.11 Accounting Treatment............................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF NAI AND NOVELLO.....................................................3
2.1 Organization and Good Standing..................................................................3
2.2 Power and Authority.............................................................................4
2.3 Authority and Validity..........................................................................4
2.4 Binding Effect..................................................................................4
2.5 Compliance with Other Instruments...............................................................4
2.6 Capitalization of NAI...........................................................................4
2.7 Absence of Certain Changes......................................................................5
2.8 Tax Liabilities.................................................................................6
2.9 No Undisclosed Liabilities......................................................................6
2.10 Title to Properties.............................................................................6
2.11 Contracts.......................................................................................6
2.12 Litigation and Government Claims................................................................7
2.13 No Violation of Any Instrument..................................................................7
2.14 Necessary Approvals and Consents................................................................7
2.15 Compliance With Laws............................................................................7
2.16 Accuracy of Information Furnished...............................................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF NOVELLO.............................................................8
3.1 Authority and Validity..........................................................................8
3.2 Binding Effect..................................................................................8
3.3 Ownership.......................................................................................8
3.4 Voting..........................................................................................8
3.5 Residency.......................................................................................8
3.6 Compliance with Other Instruments...............................................................8
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK.....................................................8
4.1 Organization and Good Standing..................................................................8
4.2 Foreign Qualification...........................................................................9
4.3 Power and Authority.............................................................................9
4.4 Authority and Validity..........................................................................9
4.5 Binding Effect..................................................................................9
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.6 Compliance with Other Instruments...............................................................9
4.7 Capitalization of OSI...........................................................................9
4.8 SEC Reports.....................................................................................9
4.9 Litigation and Government Claims...............................................................10
4.10 Necessary Approvals and Consents...............................................................10
4.11 Absence of Certain Changes or Events...........................................................10
ARTICLE 5 - JOINT COVENANTS OF NAI, NOVELLO, OSI AND OUTBACK.....................................................10
5.1 Notice of any Material Change..................................................................10
5.2 Cooperation....................................................................................11
5.3 Post-Closing Adjustment........................................................................11
5.4 Distribution and Allocations...................................................................11
5.5 Additional Agreements..........................................................................12
ARTICLE 6 - COVENANTS OF NAI AND NOVELLO.........................................................................12
6.1 Securities Law Compliance. ....................................................................12
6.2 Restriction on Transfer. ......................................................................13
6.3 Payment of Liabilities.........................................................................14
6.4 Pooling........................................................................................14
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK.........................................................................14
7.1 Employment Agreements..........................................................................14
7.2 Assumed Liabilities............................................................................15
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS....................................................15
8.1 Consents to Transaction........................................................................15
8.2 Absence of Litigation..........................................................................15
8.3 Dissenter's Rights.............................................................................15
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NAI...........................................................15
9.1 Compliance.....................................................................................15
9.2 Representations and Warranties.................................................................15
9.3 Material Adverse Changes.......................................................................16
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK..............................................16
10.1 Compliance.....................................................................................16
10.2 Representations and Warranties.................................................................16
10.3 Current Financial Status.......................................................................16
10.4 Material Adverse Changes.......................................................................16
10.5 Pooling........................................................................................16
ARTICLE 11 - INDEMNIFICATION.....................................................................................17
11.1 Indemnification Based on Agreement.............................................................17
11.2 Limitation.....................................................................................17
11.3 Cooperation....................................................................................17
11.4 Notice.........................................................................................17
ARTICLE 12 - MISCELLANEOUS.......................................................................................18
12.1 Termination....................................................................................18
12.2 Expenses.......................................................................................18
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
12.3 Entire Agreement...............................................................................18
12.4 Survival of Representations and Warranties.....................................................19
12.5 Counterparts...................................................................................19
12.6 Notices........................................................................................19
12.7 Successors and Assigns.........................................................................19
12.8 Governing Law..................................................................................19
12.9 Waiver and Other Action........................................................................20
12.10 Severability...................................................................................20
12.11 Headings.......................................................................................20
12.12 Construction...................................................................................20
12.13 Jurisdiction and Venue.........................................................................20
12.14 Enforcement....................................................................................20
12.15 Further Assurances.............................................................................20
12.16 Equitable Remedies.............................................................................20
EXHIBIT A
ARTICLES OF MERGER.....................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...................................................................................B-1
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of the 1st day of October, 1997, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), NOVELLO & ASSOCIATES, INC., a Florida
corporation ("NAI") and BENJAMIN NOVELLO, an individual residing in the State of
Florida ("Novello").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Novello is the sole owner of the issued and outstanding common
stock of NAI, and Novello is the sole director, President and is responsible for
the day-to-day operations of NAI; and
WHEREAS, Outback and NAI have entered into that certain Florida limited
partnership known as Outback/South Florida-II, Limited Partnership
("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
State of Florida; and
WHEREAS, the Board of Directors of NAI has approved the merger of NAI
into Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, NAI will be merged with and into
Outback and all of the outstanding shares of capital stock of NAI will be
converted into shares of Common Stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 The Merger. Subject to and upon the terms and conditions contained
herein, NAI shall be merged with and into Outback, with Outback being the
surviving corporation, in accordance with the Articles of Merger substantially
in the form attached to this Agreement as EXHIBIT A (the "Merger Agreement"),
which will be executed and delivered by OSI, Outback, and NAI prior to the
Merger. As a result of the Merger, each voting and nonvoting common share of NAI
outstanding immediately before the Effective Date (as herein defined) shall, by
virtue of the Merger and without any further action being
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required by the holders thereof, be converted into and exchanged for 72.0833
shares of OSI Common Stock.
1.2 Adjustments.
(a) Except as otherwise provided in this SECTION 1.2, the total number
of shares of OSI Common Stock to be issued pursuant to the Merger shall be
Twenty-One Thousand Six Hundred Twenty-Five (21,625).
(b) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, (i) the outstanding shares of capital stock
of NAI shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, or readjustment, with a record date within such
period, or a stock dividend thereon shall be declared with a record date within
such period or (ii) NAI shall have issued additional shares of its capital
stock, the number of shares of OSI Common Stock received in exchange for each
share of NAI's capital stock shall be adjusted so that the aggregate number of
shares of OSI Common Stock received in exchange for all shares of NAI's capital
stock (assuming no Dissenting Shares) remains at 21,625.
(c) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, the outstanding shares of OSI Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such period,
the number of shares of OSI Common Stock received in exchange for each share of
capital stock of NAI (as specified in SECTION 1.1 hereof) shall be adjusted to
accurately reflect such change.
1.3 Closing. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on October 1, 1997, or on such date and at
such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than October
31, 1997, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 Execution and Delivery of Closing Documents. Before the Closing,
each party shall cause to be prepared and at the Closing the parties shall
execute and deliver each agreement and instrument required by this Agreement or
the Merger Agreement to be so executed and delivered and not theretofore
accomplished. At the Closing, each party also shall execute and deliver such
other appropriate and customary documents as the other parties reasonably may
request for the purpose of consummating the transactions contemplated by this
Agreement and the Merger Agreement. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
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1.5 Execution and Filing of Merger Documents. At the time of completion
of the Closing, OSI, Outback, NAI and Novello agree to take the following
actions:
(a) to execute and deliver all documents and certificates relating to
the Merger required to be executed by them that have not already been so
executed and that are required under applicable federal, state and local laws to
be filed in order validly to effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary of State
of the State of Florida and a Certificate of Merger to be issued by each such
officer.
1.6 Effectiveness of Merger. The Merger shall become effective under
the laws of Florida upon the later of (i) filing of these Articles of Merger
with the Secretary of State of the State of Florida; or (ii) October 1, 1997
(the "Effective Date"). Such Effective Date shall be indicated on Certificates
of Merger issued by the Secretary of State of the State of Florida pursuant to
the Florida Act.
1.7 Further Assurances. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional actions
as may reasonably be deemed necessary or advisable by any party in order to
consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of NAI as existed immediately before the Effective Date.
1.8 Certificates. As soon as practicable after the Effective Date, OSI
shall make available and each holder of capital stock of NAI shall be entitled
to receive upon surrender of stock certificates of NAI representing NAI capital
stock for cancellation, certificates representing the number of shares of OSI
Common Stock into which such shares are converted in the Merger as provided in
SECTION 1.1 hereof. The OSI Common Stock into which such NAI capital stock is
converted shall be deemed issued at the Effective Date.
1.9 Closing of Transfer Books. At the Closing Date, the stock transfer
books of NAI shall be closed and no transfer of capital stock of NAI, shall
thereafter be made.
1.10 Fractional Shares. No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead, one whole share of OSI
Common Stock shall be issued for each fractional share of .5 or more of one
whole share and each fractional share of less than .5 of one whole share shall
be disregarded.
1.11 Accounting Treatment. It is the intention of the parties hereto
that the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF NAI AND NOVELLO
Each of NAI and Novello, jointly and severally, represent and warrant
to OSI and Outback as follows:
2.1 Organization and Good Standing. NAI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
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2.2 Power and Authority. NAI has the requisite power and authority and
all material licenses and permits required by governmental authorities to own,
lease and operate its properties and assets and to carry on its businesses as
currently being conducted.
2.3 Authority and Validity.
(a) NAI has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Merger Agreement and the other
documents executed or to be executed by NAI in connection with this Agreement;
and the execution, delivery and performance by NAI of this Agreement, the Merger
Agreement and the other documents executed or to be executed by NAI in
connection with this Agreement have been duly authorized by all necessary
corporate action. The execution, delivery and performance by NAI of this
Agreement, the Merger Agreement and any other documents executed or to be
executed in connection with this Agreement and the consummation of the
transactions provided for herein have been duly authorized and approved by the
board of directors and shareholders of NAI as required under the laws of the
State of Florida and NAI's corporate governance documents.
(b) Novello has the power and authority to execute, deliver and perform
his obligations under this Agreement and the other documents executed or to be
executed by Novello in connection with this Agreement.
2.4 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by NAI and Novello in connection with this
Agreement have been or will have been duly executed and delivered by NAI and
Novello, and are or will be, when executed and delivered, the legal, valid and
binding obligations of each of NAI and Novello enforceable in accordance with
their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
2.5 Compliance with Other Instruments. Neither the execution and
delivery by NAI nor Novello of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of NAI or
Novello pursuant to, its articles of incorporation, bylaws, partnership
agreement, operating agreement or other charter or governance document, or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument (including with customers),
judgment, order, injunction or decree by which NAI or Novello is bound, to which
any of them is a party, or to which any assets of any of them are subject;
provided, however, this SECTION 2.5 shall not apply with respect to any of the
foregoing if NAI is bound thereby, a party thereto, or its assets subject,
solely by reason of its status as a partner in the Partnership.
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2.6 Capitalization of NAI.
(a) The authorized capital stock of NAI consists of Three Hundred (300)
common shares. There are Three Hundred (300) common shares issued and
outstanding, all of which are owned by Novello. There are no other shareholders
of NAI and no other persons with rights or options to acquire capital stock of
NAI. All of the issued and outstanding shares of capital stock of NAI have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no shares of capital stock of NAI held in its treasury.
(b) There are no voting trusts, shareholder agreements or other voting
arrangements among the shareholders of NAI.
(c) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating NAI to
issue, sell, exchange or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of NAI.
2.7 Absence of Certain Changes. From December 31, 1996 to the Closing
Date, (except solely as a result of NAI's status as a partner in the
Partnership) NAI has not:
(a) suffered any material adverse change in its business, results of
operations, working capital, assets, liabilities, or condition (financial or
otherwise) or the manner of conducting its business;
(b) suffered any material damage or destruction to or loss of its
assets not covered by insurance, or any loss of suppliers or employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material amount of
assets to any lien, claim or encumbrance of any kind, except in the ordinary
course of business or pursuant to agreements in force at the date of this
Agreement and identified in Item 2.7 of the Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or permitted to
lapse any material rights or claims;
(e) entered into or terminated any lease, agreement, commitment or
transaction, or agreed to or made any changes in any leases or agreements, other
than transactions and commitments entered into in the ordinary course of
business;
(f) written up, written down or written off the book value of any
assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or contributed
to any employee benefit plan;
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(j) entered into any employment, consulting, compensation or collective
bargaining agreement with any person or group, except oral employment agreements
which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan or
severance agreements.
2.8 Tax Liabilities. NAI has filed all federal, state, county, local
and foreign tax returns and reports required to be filed by them by the date
hereof, including those with respect to income, payroll, property, withholding,
social security, unemployment, franchise, excise and sales taxes; NAI has either
paid in full all taxes that have become due as reflected on any return or report
and any interest and penalties with respect thereto or have fully accrued on
their books or have established adequate reserves for all taxes payable but not
yet due; and have made cash deposits with appropriate governmental authorities
representing estimated payments of taxes, including income taxes and employee
withholding tax obligations. No extension or waiver of any statute of
limitations or time within which to file any return has been granted to NAI with
respect to any tax. No unsatisfied deficiency, delinquency or default for any
tax, assessment or governmental charge has been claimed, proposed or assessed
against NAI nor has NAI received notice of any such deficiency, delinquency or
default. NAI has no reason to believe that NAI has or may have any tax
liabilities other than those reflected on the unaudited balance sheet of NAI as
of August 31, 1997, with any notes thereto, and the related unaudited statements
of income for the eight months ended August 31, 1997, together with supplemental
information on NAI, each prepared and attested to by the chief financial officer
of NAI (the "Balance Sheets") and those arising in the ordinary course of
business since the date thereof. With regard to the foregoing, NAI has relied on
the accuracy and completeness of the Schedule K-1 provided by the Partnership.
Novello shall have sole responsibility for filing all required tax
returns for NAI for all periods ending on or prior to the Effective Date. OSI
shall assist Novello in preparing income tax returns and shall cooperate with
Novello to the extent necessary therefor, and Novello shall provide OSI with
copies of all such returns at least fifteen (15) days prior to filing.
2.9 No Undisclosed Liabilities. There are no liabilities or obligations
of NAI (other than material liabilities arising solely by reason of NAI's status
as a partner in the Partnership) of any nature, whether absolute, accrued,
contingent or otherwise, other than liabilities or obligations indicated in Item
2.9 of the Disclosure Schedules.
2.10 Title to Properties. NAI has good and marketable title to the
assets reflected in their books and records as being owned by them, (except as
they have since been affected by transactions in the ordinary course of business
and consistent with past practices) the real and personal properties reflected
in the Balance Sheets (except for assets subject to financing leases required to
be capitalized under generally accepted accounting principles, all of which are
so reflected in the Balance Sheet or notes thereto) and all assets purchased by
NAI since the date of the Balance Sheet, in each case free and clear of any
lien, claim or encumbrance, except as reflected in the Balance Sheet or notes
thereto and in Item 2.10 of the Disclosure Schedule and except for liens for
taxes, assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by NAI are properly reflected on the
applicable Balance Sheets and notes thereto.
2.11 Contracts. Excluding (i) contracts and commitments between Outback
or OSI and NAI or the Partnership, (ii) contracts and commitments entered into
by the Partnership to which Outback or OSI is a party, (iii) contracts and
commitments entered into by NAI in the ordinary course of the Partnership's
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business without violation of the provisions of the Partnership Agreement, and
(iv) contracts and commitments entered into with the written consent of OSI or
Outback, Item 2.11 of the Disclosure Schedule is a complete and accurate list of
all of the contracts and commitments (including summaries of oral contracts) to
which NAI is a party or by which NAI is bound:
2.12 Litigation and Government Claims. Except as indicated in Item 2.12
of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against NAI or the Partnership or to which any of their
business or assets is subject. Except as indicated in Item 2.12 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of NAI or Novello, contemplated or, to the best knowledge of NAI or
Novello, any basis for any unasserted claims (whether or not the potential
claimant may be aware of the claim) of any nature that might be asserted against
NAI or the Partnership.
2.13 No Violation of Any Instrument. Except as indicated in Item 2.13
of the Disclosure Schedule, NAI is not in violation of or default under nor has
any event occurred that, with the lapse of time or the giving of notice or both,
would constitute a violation of or default under or permit the termination or
the acceleration of maturity of or result in the imposition of a lien, claim or
encumbrance upon any property or asset of NAI pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of NAI or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by NAI in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
customers), judgment, order, injunction or decree to which NAI is a party, by
which NAI is bound or to which any of the assets of NAI are subject.
2.14 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the State of Florida with respect to
effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities, (c) consents required to be obtained from lessors,
and (d) under the provisions of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of NAI and Novello of this Agreement, the Merger Agreement and the other
agreements executed or to be executed by them in connection with this Agreement,
and the consummation by NAI and Novello of the transactions contemplated by this
Agreement and the Merger Agreement, and the ownership and operation by Outback
of the respective businesses and properties of NAI after the Effective Date in
substantially the same manner as now operated.
2.15 Compliance With Laws. Novello has no actual knowledge that NAI or
the Partnership are not in compliance with any such laws applicable to their
respective business, where failure to so comply would have a material adverse
effect on their business, operations, properties, assets or conditions.
2.16 Accuracy of Information Furnished. No representation or warranty
by NAI or Novello in this Agreement nor any information in the Financial
Statements or in the Disclosure Schedule contains any untrue statement of a
material fact or omits to state any material fact that would make the statements
herein or therein, in light of the circumstances under which they were made,
false or misleading. Each of NAI and Novello have disclosed to OSI and Outback
all facts known to them that are material to NAI's and the Partnership's
respective businesses, operations, financial condition or prospects.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NOVELLO
In addition to the representations and warranties contained in ARTICLE
2, Novello represents and warrants to OSI and Outback as follows:
3.1 Authority and Validity. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents they are executing or will execute in connection herewith or
therewith.
3.2 Binding Effect. This Agreement and the other documents executed or
to be executed by Novello in connection with this Agreement have been or will
have been duly executed and delivered by him and are or will be, when executed
and delivered, their legal, valid and binding obligations enforceable in
accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
3.3 Ownership. Novello is the sole record and beneficial shareholder of
NAI and no other person has any rights (in any form) to acquire any capital
stock of NAI.
3.4 Voting. He acknowledges that in his individual capacity as
shareholder and director of NAI, he has voted in favor of the execution and
delivery of this Agreement and the Merger Agreement.
3.5 Residency. Novello is, and has been at all times during the one
year ending on the date hereof, a resident of the State of Florida.
3.6 Compliance with Other Instruments. Neither the execution and
delivery by Novello of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Novello
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Novello is bound,
to which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to NAI and
Novello as follows:
4.1 Organization and Good Standing. OSI and Outback are corporations
duly organized, validly existing and in good standing under the laws of the
States of Delaware and Florida, respectively.
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4.2 Foreign Qualification. Outback is duly qualified or licensed to do
business in every jurisdiction where the failure to so qualify could have a
material adverse effect on its respective business, operations, assets or
financial condition.
4.3 Power and Authority. OSI and Outback each have the corporate power
and authority and all licenses and permits required by governmental authorities
to own, lease and operate their respective properties and assets and to carry on
their respective business as currently being conducted.
4.4 Authority and Validity. OSI and Outback each have the corporate
power and authority to execute, deliver and perform their respective obligations
under this Agreement, the Merger Agreement and the other documents executed or
to be executed by OSI and Outback in connection with this Agreement and the
execution, delivery and performance by OSI and Outback of this Agreement, the
Merger Agreement and the other documents executed or to be executed by OSI and
Outback in connection with this Agreement have been duly authorized by all
necessary corporate action.
4.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by OSI and Outback in connection with this
Agreement have been or will have been duly executed and delivered by OSI and
Outback and are or will be, when executed and delivered, the legal, valid and
binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
4.6 Compliance with Other Instruments. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 Capitalization of OSI. The authorized capital stock of OSI consists
of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par value and
Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of which
approximately 48,030,588 shares of Common Stock and no shares of Preferred Stock
were issued and outstanding as of March 7, 1997. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for NAI's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, except for (i) employee and director stock
options to acquire shares of OSI Common Stock and (ii) employee stock ownership
plans, there are no options, warrants or other rights, agreements or commitments
outstanding obligating Outback or OSI to issue shares of its capital stock. All
of the outstanding shares of capital stock of Outback are owned by OSI, free and
clear of any lien or encumbrance.
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4.8 SEC Reports. OSI has delivered to NAI and Novello true and complete
copies of its (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Proxy Statement used in connection with its 1997 Annual Meeting of
Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all periodic
reports, if any, on Form 8-K filed with the Securities and Exchange Commission
since December 31, 1996 to the date hereof; and (v) all Forms 10-Q, if any,
filed with the Securities and Exchange Commission since December 31, 1996, to
the date hereof. Such documents and reports did not on their dates or the date
of filing, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. OSI has filed all material documents required to be filed by it with
the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to NAI and Novello. All financial statements and schedules included in
the documents referred to in this SECTION 4.8 were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis except
as noted therein and fairly present the information purported to be shown
therein.
4.9 Litigation and Government Claims. There is no pending suit, claim,
action or litigation or administrative, arbitration or other proceeding or
governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the State of Florida with respect to
effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities and (c) consents required to be obtained from
lessors, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
OSI and Outback of this Agreement, the Merger Agreement and the other agreements
executed or to be executed by either of them in connection with this Agreement
and the consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 Absence of Certain Changes or Events. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1996, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF NAI, NOVELLO, OSI AND OUTBACK
NAI and Novello, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally on the other hand, covenant with each other as
follows:
5.1 Notice of any Material Change. Until the Effective Date, each of
NAI, Novello, OSI and Outback shall, promptly after the first notice or
occurrence thereof but prior to the Effective Date, advise the others in writing
of any event or the existence of any state of facts that:
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(a) would make any of its representations and warranties in this
Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in the
business, results of operation, working capital, assets, liabilities or
condition (financial or otherwise) of OSI, Outback or NAI and their respective
subsidiaries, taken as a whole. No supplement or amendment to any Disclosure
Schedule shall have any effect for the purpose of determining the satisfaction
of or compliance with the conditions to the obligations of the parties to
consummate the Merger set forth elsewhere in this Agreement.
5.2 Cooperation. Until the Effective Date, each of the parties hereto
shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date and, in
any event, before the Closing Date, the approvals, authorizations and consents
necessary to consummate the transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other parties may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its control, all
conditions precedent to the obligations to close this Agreement.
5.3 Post-Closing Adjustment. As soon as practicable after the Effective
Date, but in no event more than forty-five (45) days thereafter, OSI shall
determine and report in writing to all parties hereto:
(a) the amount of current assets of NAI as of the Effective Date;
(b) the amount of all liabilities of NAI (other than liabilities
specified in Item 11.1 of the NAI Disclosure Schedule to the extent assumed by
Outback) which were not paid in full prior to the Effective Date;
(c) the estimated amount of all federal and state taxes, including, but
not limited to, federal and state income taxes, payable by NAI for the short tax
year ending on the Effective Date;
Upon receipt of such report, Novello (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Novello (and at the expense of
Novello) shall meet and attempt to agree on the items to which objection was
made. If such persons cannot agree within thirty (30) days from the date of
written objection, the items on which agreement has not been reached shall be
submitted to the Tampa, Florida office of Price Waterhouse (or other agreed upon
independent "Big Six" accounting firm) for a resolution of such items and whose
decision shall be final and binding on all parties. The fees and expenses of
Price Waterhouse (or other accounting firm) shall be paid by the non-prevailing
party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Novello within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Novello shall pay
such excess to OSI within ten (10) days of the final determination.
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<PAGE> 16
5.4 Distribution and Allocations. The parties acknowledge and agree
that notwithstanding the effective date of the Merger, Outback shall be entitled
to NAI's entire share of Partnership distributions of cash flow, and shall be
allocated NAI's shares of profit and loss, from and after October 1, 1997.
5.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take or cause to be
taken, all actions and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the appropriate vote of the
shareholders of NAI.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of OSI and Outback and Novello shall take all such
necessary action.
(c) Neither Outback, OSI, NAI nor Novello shall take any action which
would jeopardize the characterization of the Merger as a reorganization within
the meaning of Section 368(a) of the Code or the treatment of the Merger for
financial reporting purposes as a pooling of interests.
ARTICLE 6
COVENANTS OF NAI AND NOVELLO
NAI and Novello covenant and agree with OSI as follows:
6.1 Securities Law Compliance. Novello represents and warrants, and
covenants to Outback and OSI that:
(a) Novello has received all schedules and exhibits and the documents
furnished to NAI pursuant to SECTION 4.8;
(b) Novello has had the opportunity to ask questions of and receive
answers from representatives of the management of OSI concerning the terms and
conditions of the transactions contemplated hereby and to obtain all additional
information that OSI possesses or could acquire without unreasonable expense
that is necessary to verify the accuracy of information furnished to Novello.
(c) OSI and Outback have furnished him with all information requested
and full access to materials concerning OSI and Outback which the Novello and/or
his advisors deemed necessary to properly evaluate the Merger. Such information
and access have been made available and utilized to the extent Novello considers
necessary and advisable in making an informed investment decision, and Novello
has consulted his own tax advisor and understands the evaluation of such
materials may require the assistance of experts and Novello has utilized such
experts to the extent deemed necessary.
(d) Novello understands that the OSI Common Stock to be received is an
investment of a speculative nature and Novello must bear the risks thereof for
an indefinite period of time. Novello has
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<PAGE> 17
adequate means for providing for his needs, is able to bear the economic
risk of the investment and has no need for liquidity in the OSI Common Stock to
be received in the Merger.
(e) Novello and/or his representatives or advisors who have acted with
or on behalf of Novello and who have advised Novello in this matter have such
knowledge and experience in financial and business matters that Novello is
capable of evaluating the merits and risks of the Merger for OSI Common Stock.
(f) Novello is participating in the Merger solely for his account as a
private investment, and Novello has no present agreement, understanding,
arrangement or intention to sell or transfer all or any portion of the shares of
OSI Common Stock to be issued in the Merger to any other person or persons.
Novello does not presently intend to enter into any such agreement or
undertaking and there are no present circumstances which will compel Novello to
sell any OSI Common Stock so received. Novello will not sell or otherwise
transfer the shares (except for de minimis gifts of shares) unless they are
registered under the Securities Act and applicable state securities laws or, in
the opinion of OSI and its counsel, an exemption from registration is available
therefor.
(g) The investment by Novello in OSI Common Stock pursuant to the
Merger is a suitable investment for Novello given the investment goals and
objectives of Novello.
(h) Novello agrees to indemnify and hold OSI and Outback and each of
their respective officers, directors and advisors harmless against all liability
arising out of or in connection with any purchase, resale or distribution by
Novello of any OSI Common Stock received hereby which is effected other than in
strict compliance with the terms hereof and applicable law.
(i) Novello understands that the shares of OSI Common Stock to be
issued in the Merger will not be registered under the Securities Act, nor any
state securities laws, and such OSI Common Stock may not be sold or transferred
except in compliance with such laws. Novello agrees to comply with the
restrictions on transfer contained in Section 6.2 hereof.
(j) Novello understands that OSI will place an appropriate legend on
the certificate representing OSI Common Stock to be received restricting the
transfer of the shares and stop-transfer instructions will be given to the
transfer agent for the OSI Common Stock with respect to such certificates.
(k) Novello is a natural person (i) whose net worth (the excess of
total assets over total liabilities), individually or jointly with his spouse,
exceeds $1,000,000 (inclusive of the value of home, home furnishings and
automobiles); or (ii) who had an Individual Annual Adjusted Gross Income in
excess of $200,000 in each of the two most recent tax years or joint income with
Novello's spouse in excess of $300,000 in each of those years and reasonably
expects to reach the same income level in the current tax year.
6.2 Restriction on Transfer.
(a) Novello covenants and agrees not to sell, convey, pledge, grant a
security interest in, assign or otherwise transfer or encumber any of the OSI
Common Stock to be issued in the Merger except in accordance with the following
provisions:
(i) Novello may transfer twenty percent (20%) of the OSI
Common Stock received in the Merger at any time after October 1, 1998;
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<PAGE> 18
(ii) Novello may transfer an additional twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
1999;
(iii) Novello may transfer an additional twenty percent (20%)
of the OSI Common Stock received into the Merger at any time after October 1,
2000;
(iv) Novello may transfer an additional twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
2001;
(v) Novello may transfer the remaining twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after October 1, 2002.
(b) Notwithstanding the provisions of (a) above, Novello may make bona
fide gifts of OSI Common Stock to immediate family members or trusts of which
immediate family members are the exclusive beneficiaries provided, however, the
donees of such gifts shall take such OSI Common Stock subject to the
restrictions contained in (a) above. For purposes of determining Novello's
compliance with (I) through (v) above, any transfers by donees shall be
aggregated with, and shall be considered as, transfers by Novello for purposes
of calculating compliance with (i) through (v) of subsection (a).
(c) OSI's transfer agent shall maintain stop transfer instructions on
the OSI Common Stock issued in the Merger and the certificates representing such
shares shall bear an appropriate legend evidencing the restrictions contained in
(a) above.
6.3 Payment of Liabilities. NAI and Novello covenant and agree that all
debts and liabilities of NAI relating to periods prior to the Closing Date shall
be paid or satisfied in full prior to the Effective Date, except only current
liabilities and those debts and liabilities of NAI specified in Item 11.1 of the
Disclosure Schedules.
6.4 Pooling. Novello agrees that until such time as financial results
of OSI covering at least thirty (30) days of combined operations of OSI and NAI
subsequent to the Effective Date have been published, he will not sell or
otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with NAI and
Novello as follows:
7.1 Employment Agreements. Solely with respect to the Merger, and any
consequential termination of any partnership by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between the Partnership, as
employer, and the general managers of the Partnership's Outback Steakhouse(R)
restaurants, as employees. Outback shall succeed to all rights and
14
<PAGE> 19
obligations of the Partnership under such Employment Agreements. Nothing
contained herein shall be construed as in any way limiting Outback's right to
terminate any such Employment Agreement as a result of any circumstance or event
other than the Merger and consequential termination of the Partnership by
operation of law.
7.2 Assumed Liabilities. OSI and Outback agree to assume and pay the
liabilities specified in Item 11.1 (subject to the amount limits specified in
Item 11.1 of the Disclosure Schedules) and to indemnify and hold harmless
Novello from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of NAI, Novello, OSI
and Outback to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 Consents to Transaction. NAI, Outback and OSI shall have received
all consents or approvals and made all applications, requests, notices and
filings with, any person, governmental authority or governmental agency required
to be obtained or made in connection with the consummation of the transactions
contemplated by this Agreement. There shall have been obtained from all state
and local governments and governmental agencies all approvals and consents
necessary to enable NAI and/or the Partnership, as applicable, to transfer their
liquor licenses and permits to Outback, to enable Outback to assume such
licenses and permits or to enable Outback to operate restaurants (of the kind
and quality customarily operated by Outback) using such permits or licenses.
Copies of all consents and approvals received by any party pursuant to this
SECTION 8.1 shall be furnished to the other party.
8.2 Absence of Litigation. No governmental agency or authority shall
have instituted or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and no order, judgment or decree by
any court or governmental agency or authority shall be in effect that enjoins,
restrains or prohibits the same or otherwise would materially interfere with the
operation of the assets and business of NAI or the Partnership or OSI and its
subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
8.3 Dissenter's Rights. The number of shares of capital stock of NAI
for which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.12 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF NAI
The obligations of NAI and Novello to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
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<PAGE> 20
9.1 Compliance. OSI and Outback shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
OSI and Outback on or before the Closing Date.
9.2 Representations and Warranties. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to NAI and Novello pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
9.3 Material Adverse Changes. Since the date hereof, there shall have
occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of OSI
and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 Compliance. NAI and Novello shall have or shall have caused to be
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
any of them on or before the Closing Date.
10.2 Representations and Warranties. All of the representations and
warranties made by NAI and/or Novello in this Agreement, the Disclosure
Schedule, and in all certificates and other documents delivered by NAI or
Novello pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
10.3 Current Financial Status. OSI shall have received the unaudited
financial statements of NAI as of August 31, 1997, for the period then ended.
10.4 Material Adverse Changes. Since December 31, 1996, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of NAI
or the Partnership.
10.5 Pooling. OSI shall have received a letter from Deloitte & Touche,
in form and substance satisfactory to OSI and dated not more than five days
prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
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<PAGE> 21
ARTICLE 11
INDEMNIFICATION
Novello, on the one hand, and OSI and Outback, jointly and severally,
on the other hand, agree as follows:
11.1 Indemnification Based on Agreement. Subject to the limitations
contained in SECTION 11.2 hereof, Novello shall indemnify and hold harmless OSI,
Outback and NAI, and OSI, Outback and NAI, jointly and severally, shall
indemnify and hold harmless Novello, against any losses, claims, damages or
liabilities to which such indemnified party may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any facts or circumstances that would constitute a breach
by the other of any representation, warranty or covenant contained herein or in
any agreement executed pursuant hereto and will reimburse any legal or other
expenses reasonably incurred by any indemnified party in connection with
investigating or defending any such loss, claim, damage, liability or action.
In addition to the above, Novello shall indemnify OSI, Outback and NAI,
as provided in the first paragraph of this SECTION 11.1, against any loss,
claim, damage or liability arising out of (i) any tax liability of NAI for any
period prior to and including October 1, 1997 and (ii) any debt of NAI (other
than the debts specified in Item 11.1 of the Disclosure Schedule to the extent
assumed by Outback), and (iii) all claims, obligations, causes of action and
liabilities, of whatever kind or character, of any of NAI which arise out of or
are based upon events first occurring on or before the Effective Date, except
only the liabilities assumed by Outback as specified in Item 11.1 of the
Disclosure Schedule.
11.2 Limitation. Novello shall have no obligation under SECTION 11.1 to
indemnify OSI, Outback or NAI for any liability, loss, claim or damage arising
out of or based upon facts or actions first occurring after the Effective Date.
All obligations of indemnity (other than those relating to tax obligations of
NAI under SECTION 11.1 above which shall continue for the period specified in
SECTION 12.4(B) hereof) shall terminate two (2) years from the Closing Date;
provided, however, the obligations of indemnity shall not terminate with respect
to any matter for which indemnification is claimed within two (2) years from the
Closing Date.
11.3 Cooperation. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 Notice. An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of service
or summons to appear in any action begun in respect of which indemnity may be
sought hereunder. Failure to so notify the indemnifying party or parties shall
cause the indemnified party to be liable for any damage caused by failure to
give timely notice. The indemnifying party or parties may participate at their
own expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after receipt of
such notice, they may assume the defense of such action with counsel chosen by
the indemnifying party or parties and approved by the indemnified party in such
action, unless the indemnified party reasonably objects to such assumption on
the ground that its counsel has advised it that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party shall have
the right to employ counsel approved by the indemnifying
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<PAGE> 22
party or parties. If the indemnifying party or parties assume the defense of
such action, the indemnifying party or parties shall not be liable for fees and
expenses of counsel for the indemnified party incurred hereafter in connection
with such action. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel for the indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances unless, in the reasonable opinion of such counsel, there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of NAI:
(a) by mutual consent of NAI and OSI;
(b) by OSI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of NAI or Novello set forth
herein or if there has been any material failure on the part of NAI or Novello
to comply with their obligations hereunder;
(c) by NAI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of OSI or Outback set forth
herein or if there has been any material failure on the part of OSI or Outback
to comply with its obligations hereunder;
(d) by either OSI, NAI or Novello, if the transactions contemplated by
this Agreement have not been consummated by October 31, 1997, unless such
failure of consummation is due to the failure of the terminating party to
perform or observe the covenants, agreements and conditions hereof to be
performed or observed by it at or before the Closing Date;
(e) by either OSI, or NAI if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived by it at
or before the Closing Date; and
(f) by either NAI or OSI if the transactions contemplated hereby
violate any nonappealable final order, decree or judgment of any court or
governmental body or agency having competent jurisdiction.
12.2 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
12.3 Entire Agreement. This Agreement and the exhibits and Disclosure
Schedule hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
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<PAGE> 23
12.4 Survival of Representations and Warranties.
(a) The representations, warranties and indemnification obligations of
OSI and Outback contained herein or in any exhibit, certificate, document or
instrument delivered pursuant to this Agreement shall survive the Closing for a
period of two years; provided, however, that the obligations of OSI and Outback
under ARTICLE 7 and ARTICLE 11 hereof shall survive for the periods provided
therein.
(b) Except where otherwise specifically provided in this Agreement, the
representations, warranties and indemnification obligations of Novello contained
herein or in any exhibit, schedule, certificate, document or instrument
delivered pursuant to this Agreement shall survive the Closing for a period of
three years from the Effective Date; provided, however, the representations and
warranties contained in SECTION 2.7 shall survive the Closing for a period
ending four years after the filing of NAI's federal income tax return for the
period including the Effective Date.
12.5 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 Notices. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
If to NAI or Novello: NOVELLO & ASSOCIATES, INC.
258 Commercial Boulevard - Suite 1-B
Lauderdale by the Sea, Florida 33308
Attention: Benjamin Novello
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow
General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 Successors and Assigns. This Agreement and the rights, interests
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
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<PAGE> 24
12.9 Waiver and Other Action. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
12.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 Headings. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 Construction. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 Jurisdiction and Venue. The parties agree that any action brought
by either party against the other in any court, whether federal or state, shall
be brought within the State of Florida in the judicial circuit in which OSI has
its principal place of business. Each party hereby agrees to submit to the
personal jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
12.14 Enforcement. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 Further Assurances. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
12.16 Equitable Remedies. The parties hereto acknowledge that a refusal
by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
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<PAGE> 25
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
"NAI"
Attest: NOVELLO & ASSOCIATES, INC.
a Florida corporation
By: By:
----------------------------- -------------------------------
Title: Secretary BENJAMIN NOVELLO
Title: President
Witness: "Novello"
-----------------------------------
BENJAMIN NOVELLO
21
<PAGE> 26
EXHIBIT A
ARTICLES OF MERGER
THIS AGREEMENT, PLAN AND ARTICLES OF MERGER ("Articles of Merger"),
dated as of October 1, 1997, is entered into by and among NOVELLO & ASSOCIATES,
INC., a Florida corporation ("NAI"); OUTBACK STEAKHOUSE, INC., a Delaware
corporation ("OSI"); and OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation ("Outback").
W I T N E S E T H:
WHEREAS, NAI is a corporation duly organized and validly existing under
the laws of the State of Florida, and the authorized and outstanding capital
stock of NAI is as follows:
<TABLE>
<CAPTION>
Authorized Shares Issued
NAI Capital Stock and Outstanding
--- ------------- ---------------
<S> <C> <C>
NOVELLO & ASSOCIATES, INC. 300 Common Shares 300 Common Shares
</TABLE>
WHEREAS, OSI is a corporation duly organized and validly existing under
the laws of the State of Delaware; and
WHEREAS, OSI is authorized to issue 2,000,000 shares of Preferred
Stock, par value $.01, none of which are outstanding and 200,000,000 shares of
Common Stock, $.01 par value (the "OSI Common Stock"), of which approximately
48,030,588 shares of OSI Common Stock are issued and outstanding as of March 7,
1997; and
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, the respective Boards of Directors of each of NAI, Outback,
and OSI deem it advisable, for the benefit of their respective corporations and
shareholders, that NAI be merged into Outback, with Outback as the surviving
corporation (in its capacity as surviving corporation, Outback is hereinafter
sometimes referred to as the "Surviving Corporation"), pursuant to the
provisions of Sections 607.1101-607.1107 of the Florida Business Corporation Act
(the "Florida Act"), and have approved these Articles of Merger; and
WHEREAS, the Board of Directors of NAI has directed that these Articles
of Merger be submitted to its voting shareholder for approval and adoption and
the voting shareholder of NAI has approved and adopted these Articles of Merger
in accordance with Florida Law and the corporate governance documents of NAI by
unanimous written consent dated September , 1997; and
WHEREAS, OSI as the sole shareholder of Outback has approved and
adopted these Articles of Merger by written consent on September 30, 1997; and
WHEREAS, the Agreement and Plan of Reorganization (the "Reorganization
Agreement"), which Outback, OSI, and NAI have entered, contemplates the
execution and delivery of these Articles of Merger.
A-1
<PAGE> 27
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for the purpose of prescribing the terms and
conditions of the merger and such other details and provisions as are deemed
necessary or desirable, the parties hereto agree as follows:
MERGER. The names of the corporations which propose to merge are
NOVELLO & ASSOCIATES, INC., a Florida corporation ("NAI"), and OUTBACK
STEAKHOUSE OF FLORIDA, INC. ("Outback"). In accordance with the provisions of
the Florida Act at the Effective Date (as hereinafter defined), NAI shall be
merged into Outback, and Outback shall be the Surviving Corporation and as such
shall continue to be governed by the laws of the State of Florida. The plan of
merger set forth in these Articles of Merger was duly authorized by each of
Outback and NAI, respectively, by all action required by the laws under which it
was incorporated or organized and by its constituent documents.
1. CONTINUATION OF CORPORATE EXISTENCE. The corporate existence and
identity of Outback, with all its purposes, powers, franchises, privileges,
rights and immunities, shall continue unaffected and unimpaired by the merger
and the corporate existence and identity of NAI with all its purposes, powers,
franchises, privileges, rights and immunities at the Effective Date shall be
merged with and into that of Outback, and Outback as the Surviving Corporation
shall be vested fully therewith, and the separate corporate existence and
identity of NAI shall thereafter cease except to the extent continued by
statute.
2. EFFECTIVE DATE. The merger shall become effective (hereinbefore and
hereinafter called the "Effective Date") upon the later of (i) filing of these
Articles of Merger with the Secretary of State of the State of Florida; or (ii)
October 1, 1997. Such Effective Date shall be indicated on Certificates of
Merger issued by the Secretary of State of the State of Florida pursuant to the
Florida Act.
3. CORPORATE GOVERNMENT.
(a) The Certificate of Incorporation of Outback, as in effect
on the Effective Date, shall continue in full force and effect and
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Outback, as in effect as of the Effective
Date, shall continue in full force and effect and shall be the Bylaws
of the Surviving Corporation.
(c) The members of the Board of Directors and the officers of
the Surviving Corporation shall be the persons holding such positions
for Outback as of the Effective Date.
4. CONVERSION OF SHARES. The manner and basis of converting the capital
stock of NAI into OSI Common Stock, subject to SECTION 5(C) below with respect
to fractional shares, shall be as follows:
(a) Each share of NAI common stock which shall be outstanding
immediately prior to the Effective Date shall at the Effective Date, by
virtue of the merger and without any action on the part of the holder
thereof, be converted into and exchanged for 72.0833 shares of OSI
Common Stock.
(b) The Outback Capital Stock outstanding immediately prior to
the Effective Date shall be unaffected by the merger.
A-2
<PAGE> 28
(c) The stock transfer books of NAI shall be closed as of the
close of business on the Effective Date and no transfer of record of
any of its capital stock shall take place thereafter.
(d) No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead one whole share
of OSI Common Stock shall be issued to each holder of shares of common
stock of the merging corporations whose fractional share interest is .5
or more of one whole share; each fraction of less than .5 of one whole
share shall be disregarded.
(e) Notwithstanding the foregoing, the OSI shall not be
required to issue or distribute more than 21,625 shares of OSI Common
Stock pursuant to the merger, less any shares reserved for dissenters'
rights, as described in Article 1 of the Reorganization Agreement.
(f) All of the shares of OSI Common Stock, when delivered
pursuant to the provisions of these Articles of Merger, shall be
validly issued, fully paid and nonassessable.
(g) At the Effective Date, each holder of certificates
representing shares of the common stock of NAI shall thereupon cease to
have any rights with respect to such shares and shall be deemed to be a
shareholder of OSI to the extent of the number of shares of OSI Common
Stock to which such shareholder shall be entitled in accordance with
these Articles of Merger; and shall surrender certificates representing
shares of the common stock of NAI to the OSI, whereupon such holder
shall receive a certificate or certificates for the number of shares of
OSI Common Stock to which such holder is entitled hereunder.
5. RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under the laws of the
State of Florida.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of Outback, and NAI and all property, real, personal and mixed
and all debts due on whatever account, including subscription to shares
and all other chooses in action and every other interest of or
belonging or due to NAI shall be taken and deemed to be transferred or
invested in the Surviving Corporation without further act or deed.
(c) At the Effective Date, the Surviving Corporation shall
thenceforth be responsible and liable for all liabilities and
obligations of NAI and any claim existing or action or proceeding
pending by or against NAI or Outback may be prosecuted as if the merger
had not occurred or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the property
of NAI or Outback shall be impaired by the merger.
6. CONSENT OF SHAREHOLDERS. These Articles of Merger has been adopted
by the shareholders of NAI in accordance with Florida Law and its corporate
governance documents by unanimous written consent effective as of September ,
1997. These Articles of Merger has been adopted by the written consent of the
sole shareholder of Outback dated September 30, 1997 pursuant to the Florida
Act.
7. DISSENTING SHAREHOLDERS. If any shareholder of NAI files a written
objection to these Articles of Merger before a vote of the shareholders is taken
hereon and complies with the further provisions of the Florida Act, he may be
paid the fair value of his shares. If any shareholder of NAI
A-3
<PAGE> 29
lawfully elects, pursuant to the Florida Act, to exercise or pursue his right to
dissent from any of the corporate actions referred to in these Articles of
Merger with respect to the shares of common stock of NAI owned by such
shareholder (the "Dissenting Shares"), such shareholder shall be entitled to
exercise only those rights available to him as set forth in the Florida Act and,
in that event, only in the manner set forth therein. During the period in which
any such shareholder shall be exercising or pursuing any of such shareholder's
rights of dissent as specified in the Florida Act, such shareholder shall have
no other rights pursuant to or arising from these Articles of Merger.
8. REORGANIZATION AGREEMENT. These Articles of Merger is intended to
supplement the Reorganization Agreement and is not intended to conflict with or
supersede that agreement and, in the event of any conflict, the provisions of
the Reorganization Agreement shall control.
9. COPIES. A copy of these Articles of Merger shall be on file at the
principal place of business of the Surviving Corporation located at 550 North
Reo Street, Suite 200, Tampa, Florida 33609. A copy of these Articles of Merger
will be furnished by the Surviving Corporation, on request and without cost, to
any shareholder of any corporation that is a party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement, Plan
and Articles of Merger as of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came ROBERT D.
BASHAM and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE, INC., a Delaware corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
----------------------
A-4
<PAGE> 30
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came PAUL E.
AVERY and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE OF FLORIDA, INC., a Florida corporation, who are personally known to
me, and each being first duly sworn, did depose and say that they executed the
foregoing on behalf of said corporation by order of the Board of Directors of
said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
----------------------
"NAI"
Attest: NOVELLO & ASSOCIATES, INC.
a Florida corporation
By: By:
----------------------------- -------------------------------
Title: Secretary BENJAMIN NOVELLO
Title: President
A-5
<PAGE> 31
STATE OF FLORIDA )
) ss
COUNTY OF )
On this ______ day of October, 1997, before me, personally came BENJAMIN
NOVELLO and ___________________________, President and Secretary, respectively,
of NOVELLO & ASSOCIATES, INC., a Florida corporation, who are personally known
to me, and each being first duly sworn, did depose and say that they executed
the foregoing on behalf of said corporation by order of the Board of Directors
of said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
----------------------
A-6
<PAGE> 32
EXHIBIT B
DISCLOSURE SCHEDULES
Item 2.7 Any asset acquired or disposed of, or indebtedness incurred,
assumed, guaranteed, endorsed, paid or discharged; any material
amount of assets subjected or permitted to be subjected to any
liability or obligation or to any lien, claim or encumbrance of
any kind, except in the ordinary course of business or pursuant
to agreements in force at the date of this Agreement and
identified below:
None.
Item 2.9(a) Material liabilities or obligations, contingent or otherwise of
the Partnership of any nature:
None.
Item 2.9(b) Liabilities or obligations of NAI (other than material
liabilities arising solely by reason of NAI's status as a
partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise:
None.
Item 2.10 Liens and encumbrances on real and personal property purchased
by NAI or the Partnership since the date of the Balance Sheet,
except for liens for taxes, assessments or other governmental
charges not yet due and payable.
None.
Item 2.11 Contracts and commitments not in the ordinary course of the
Partnership's business.
None.
Item 2.12 Pending suits, claims, actions or litigation or administrative,
arbitration or other proceedings or governmental investigations
or inquiries against NAI or the Partnership to which any of
their business or assets is subject.
None.
B-1
<PAGE> 33
Item 2.13 Violations and defaults of NAI and the Partnership.
None.
Item 11.1 Current liabilities and those debts and liabilities of NAI
agreed to be assumed by Outback:
None.
08/07/97
B-2
<PAGE> 1
EXHIBIT 4.23
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
AND
SONGLINES, INC.
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
[S] [C] [C]
ARTICLE 1 - PLAN OF ACQUISITION..............................................1
1.1 The Merger.......................................................1
1.2 Adjustments......................................................2
1.3 Closing..........................................................2
1.4 Execution and Delivery of Closing Documents......................2
1.5 Execution and Filing of Merger Documents.........................3
1.6 Effectiveness of Merger..........................................3
1.7 Further Assurances...............................................3
1.8 Certificates.....................................................3
1.9 Closing of Transfer Books........................................3
1.10 Fractional Shares................................................3
1.11 Accounting Treatment.............................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SONGLINES AND ERICKSON.........3
2.1 Organization and Good Standing...................................3
2.2 Power and Authority..............................................4
2.3 Authority and Validity...........................................4
2.4 Binding Effect...................................................4
2.5 Compliance with Other Instruments................................4
2.6 Capitalization of Songlines......................................4
2.7 Absence of Certain Changes.......................................5
2.8 Tax Liabilities..................................................6
2.9 No Undisclosed Liabilities.......................................6
2.10 Title to Properties..............................................6
2.11 Contracts........................................................6
2.12 Litigation and Government Claims.................................7
2.13 No Violation of Any Instrument...................................7
2.14 Necessary Approvals and Consents.................................7
2.15 Compliance With Laws.............................................7
2.16 Accuracy of Information Furnished................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF ERICKSON.......................8
3.1 Authority and Validity...........................................8
3.2 Binding Effect...................................................8
3.3 Ownership........................................................8
3.4 Voting...........................................................8
3.5 Residency........................................................8
3.6 Compliance with Other Instruments................................8
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK................8
4.1 Organization and Good Standing...................................8
4.2 Foreign Qualification............................................9
4.3 Power and Authority..............................................9
4.4 Authority and Validity...........................................9
4.5 Binding Effect...................................................9
(i)
<PAGE> 3
<TABLE>
PAGE
----
<S> <C> <C>
4.6 Compliance with Other Instruments................................9
4.7 Capitalization of OSI............................................9
4.8 SEC Reports......................................................9
4.9 Litigation and Government Claims................................10
4.10 Necessary Approvals and Consents................................10
4.11 Absence of Certain Changes or Events............................10
ARTICLE 5 - JOINT COVENANTS OF SONGLINES, ERICKSON, OSI AND OUTBACK.........10
5.1 Notice of any Material Change...................................10
5.2 Cooperation.....................................................11
5.3 Post-Closing Adjustment.........................................11
5.4 Distribution and Allocations....................................11
5.5 Additional Agreements...........................................12
ARTICLE 6 - COVENANTS OF SONGLINES AND ERICKSON.............................12
6.1 Securities Law Compliance. .....................................12
6.2 Restriction on Transfer. .......................................13
6.3 Payment of Liabilities..........................................14
6.4 Pooling.........................................................14
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK....................................14
7.1 Employment Agreements...........................................14
7.2 Assumed Liabilities.............................................15
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS...............15
8.1 Consents to Transaction.........................................15
8.2 Absence of Litigation...........................................15
8.3 Dissenter's Rights..............................................15
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF SONGLINES................15
9.1 Compliance......................................................15
9.2 Representations and Warranties..................................15
9.3 Material Adverse Changes........................................16
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK.........16
10.1 Compliance.....................................................16
10.2 Representations and Warranties.................................16
10.3 Current Financial Status.......................................16
10.4 Material Adverse Changes.......................................16
10.5 Pooling........................................................16
ARTICLE 11 - INDEMNIFICATION................................................17
11.1 Indemnification Based on Agreement.............................17
11.2 Limitation.....................................................17
11.3 Cooperation....................................................17
11.4 Notice.........................................................17
ARTICLE 12 - MISCELLANEOUS..................................................18
12.1 Termination....................................................18
12.2 Expenses.......................................................18
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
12.3 Entire Agreement................................................18
12.4 Survival of Representations and Warranties......................19
12.5 Counterparts....................................................19
12.6 Notices.........................................................19
12.7 Successors and Assigns..........................................19
12.8 Governing Law...................................................19
12.9 Waiver and Other Action.........................................20
12.10 Severability....................................................20
12.11 Headings........................................................20
12.12 Construction....................................................20
12.13 Jurisdiction and Venue..........................................20
12.14 Enforcement.....................................................20
12.15 Further Assurances..............................................20
12.16 Equitable Remedies..............................................20
EXHIBIT A
ARTICLES OF MERGER.................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...............................................B-1
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of the 1st day of October, 1997, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), SONGLINES, INC., a Texas corporation
("Songlines") and STEPHEN ERICKSON, an individual residing in the State of Texas
("Erickson").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Erickson is the sole owner of the issued and outstanding
common stock of Songlines, and Erickson is the sole director, President and is
responsible for the day-to-day operations of Songlines; and
WHEREAS, Outback and Songlines have entered into that certain Florida
limited partnership known as Outback Steakhouse of Houston-II, Ltd.
("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
State of Texas; and
WHEREAS, the Board of Directors of Songlines has approved the merger of
Songlines into Outback (the "Merger") upon the terms and conditions set forth in
this Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, Songlines will be merged with and into
Outback and all of the outstanding shares of capital stock of Songlines will be
converted into shares of Common Stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
1
<PAGE> 6
ARTICLE 1
PLAN OF ACQUISITION
1.1 The Merger. Subject to and upon the terms and conditions contained
herein, Songlines shall be merged with and into Outback, with Outback being the
surviving corporation, in accordance with the Articles of Merger substantially
in the form attached to this Agreement as EXHIBIT A (the "Merger Agreement"),
which will be executed and delivered by OSI, Outback, and Songlines prior to the
Merger. As a result of the Merger, each voting and nonvoting common share of
Songlines outstanding immediately before the Effective Date (as herein defined)
shall, by virtue of the Merger and without any further action being required by
the holders thereof, be converted into and exchanged for 22.084 shares of OSI
Common Stock.
1.2 Adjustments.
(a) Except as otherwise provided in this SECTION 1.2, the total number
of shares of OSI Common Stock to be issued pursuant to the Merger shall be
Eleven Thousand Forty-Two (11,042).
(b) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, (i) the outstanding shares of capital stock
of Songlines shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, or readjustment, with a record date within such
period, or a stock dividend thereon shall be declared with a record date within
such period or (ii) Songlines shall have issued additional shares of its capital
stock, the number of shares of OSI Common Stock received in exchange for each
share of Songlines's capital stock shall be adjusted so that the aggregate
number of shares of OSI Common Stock received in exchange for all shares of
Songlines's capital stock (assuming no Dissenting Shares) remains at 11,042.
(c) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, the outstanding shares of OSI Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such period,
the number of shares of OSI Common Stock received in exchange for each share of
capital stock of Songlines (as specified in SECTION 1.1 hereof) shall be
adjusted to accurately reflect such change.
1.3 Closing. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on October 1, 1997, or on such date and at
such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than October
31, 1997, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 Execution and Delivery of Closing Documents. Before the Closing,
each party shall cause to be prepared and at the Closing the parties shall
execute and deliver each agreement and instrument required by this Agreement or
the Merger Agreement to be so executed and delivered and not theretofore
accomplished. At the Closing, each party also shall execute and deliver such
other appropriate and customary documents as the other parties reasonably may
request for the purpose of consummating the
2
<PAGE> 7
transactions contemplated by this Agreement and the Merger Agreement. All
actions taken at the Closing shall be deemed to have been taken simultaneously
at the time the last of any such actions is taken or completed.
1.5 Execution and Filing of Merger Documents. At the time of completion
of the Closing, OSI, Outback, Songlines and Erickson agree to take the following
actions:
(a) to execute and deliver all documents and certificates relating to
the Merger required to be executed by them that have not already been so
executed and that are required under applicable federal, state and local laws to
be filed in order validly to effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary of State
of the State of Florida and the Secretary of State of the State of Texas and a
Certificate of Merger to be issued by each such officer.
1.6 Effectiveness of Merger. The Merger shall become effective under
the laws of Florida upon the later of (i) filing of these Articles of Merger
with the Secretary of State of the State of Florida and the Secretary of State
of the State of Texas; or (ii) October 1, 1997 (the "Effective Date"). Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Texas pursuant to the Florida Act and Texas Law.
1.7 Further Assurances. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional actions
as may reasonably be deemed necessary or advisable by any party in order to
consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of Songlines as existed immediately before the Effective
Date.
1.8 Certificates. As soon as practicable after the Effective Date, OSI
shall make available and each holder of capital stock of Songlines shall be
entitled to receive upon surrender of stock certificates of Songlines
representing Songlines capital stock for cancellation, certificates representing
the number of shares of OSI Common Stock into which such shares are converted in
the Merger as provided in SECTION 1.1 hereof. The OSI Common Stock into which
such Songlines capital stock is converted shall be deemed issued at the
Effective Date.
1.9 Closing of Transfer Books. At the Closing Date, the stock transfer
books of Songlines shall be closed and no transfer of capital stock of
Songlines, shall thereafter be made.
1.10 Fractional Shares. No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead, one whole share of OSI
Common Stock shall be issued for each fractional share of .5 or more of one
whole share and each fractional share of less than .5 of one whole share shall
be disregarded.
1.11 Accounting Treatment. It is the intention of the parties hereto
that the Merger will be treated for financial reporting purposes as a pooling of
interests.
3
<PAGE> 8
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SONGLINES AND ERICKSON
Each of Songlines and Erickson, jointly and severally, represent and
warrant to OSI and Outback as follows:
2.1 Organization and Good Standing. Songlines is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas.
2.2 Power and Authority. Songlines has the requisite power and
authority and all material licenses and permits required by governmental
authorities to own, lease and operate its properties and assets and to carry on
its businesses as currently being conducted.
2.3 Authority and Validity.
(a) Songlines has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement, the Merger Agreement and the
other documents executed or to be executed by Songlines in connection with this
Agreement; and the execution, delivery and performance by Songlines of this
Agreement, the Merger Agreement and the other documents executed or to be
executed by Songlines in connection with this Agreement have been duly
authorized by all necessary corporate action. The execution, delivery and
performance by Songlines of this Agreement, the Merger Agreement and any other
documents executed or to be executed in connection with this Agreement and the
consummation of the transactions provided for herein have been duly authorized
and approved by the board of directors and shareholders of Songlines as required
under the laws of the State of Texas and Songlines's corporate governance
documents.
(b) Erickson has the power and authority to execute, deliver and
perform his obligations under this Agreement and the other documents executed or
to be executed by Erickson in connection with this Agreement.
2.4 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by Songlines and Erickson in connection
with this Agreement have been or will have been duly executed and delivered by
Songlines and Erickson, and are or will be, when executed and delivered, the
legal, valid and binding obligations of each of Songlines and Erickson
enforceable in accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
2.5 Compliance with Other Instruments. Neither the execution and
delivery by Songlines nor Erickson of this Agreement and the Merger Agreement,
nor the consummation by them of the transactions contemplated hereby and
thereby, will violate, breach, be in conflict with, or constitute a default
under, or permit the termination or the acceleration of maturity of, or result
in the imposition of any lien, claim or encumbrance upon any material property
or asset of Songlines or Erickson pursuant to, its articles of incorporation,
bylaws, partnership agreement, operating agreement or other charter or
governance document, or any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other agreement or instrument
(including with customers), judgment, order, injunction or decree by which
Songlines or Erickson is bound, to which any of them is a party, or to which any
assets of any of them are subject; provided, however, this SECTION 2.5 shall not
apply with respect to any of the
4
<PAGE> 9
foregoing if Songlines is bound thereby, a party thereto, or its assets subject,
solely by reason of its status as a partner in the Partnership.
2.6 Capitalization of Songlines.
(a) The authorized capital stock of Songlines consists of One Thousand
(1,000) common shares. There are Five Hundred (500) common shares issued and
outstanding, all of which are owned by Erickson. There are no other shareholders
of Songlines and no other persons with rights or options to acquire capital
stock of Songlines. All of the issued and outstanding shares of capital stock of
Songlines have been duly authorized and validly issued and are fully paid and
nonassessable. There are no shares of capital stock of Songlines held in its
treasury.
(b) There are no voting trusts, shareholder agreements or other voting
arrangements among the shareholders of Songlines.
(c) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating Songlines
to issue, sell, exchange or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of Songlines.
2.7 Absence of Certain Changes. From December 31, 1996 to the Closing
Date, (except solely as a result of Songlines's status as a partner in the
Partnership) Songlines has not:
(a) suffered any material adverse change in its business, results of
operations, working capital, assets, liabilities, or condition (financial or
otherwise) or the manner of conducting its business;
(b) suffered any material damage or destruction to or loss of its
assets not covered by insurance, or any loss of suppliers or employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material amount of
assets to any lien, claim or encumbrance of any kind, except in the ordinary
course of business or pursuant to agreements in force at the date of this
Agreement and identified in Item 2.7 of the Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or permitted to
lapse any material rights or claims;
(e) entered into or terminated any lease, agreement, commitment or
transaction, or agreed to or made any changes in any leases or agreements, other
than transactions and commitments entered into in the ordinary course of
business;
(f) written up, written down or written off the book value of any
assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
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securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or contributed
to any employee benefit plan;
(j) entered into any employment, consulting, compensation or collective
bargaining agreement with any person or group, except oral employment agreements
which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan or
severance agreements.
2.8 Tax Liabilities. Songlines has filed all federal, state, county,
local and foreign tax returns and reports required to be filed by them by the
date hereof, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales taxes;
Songlines has either paid in full all taxes that have become due as reflected on
any return or report and any interest and penalties with respect thereto or have
fully accrued on their books or have established adequate reserves for all taxes
payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to Songlines with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
claimed, proposed or assessed against Songlines nor has Songlines received
notice of any such deficiency, delinquency or default. Songlines has no reason
to believe that Songlines has or may have any tax liabilities other than those
reflected on the unaudited balance sheet of Songlines as of August 30, 1997,
with any notes thereto, and the related unaudited statements of income for the
eight months ended August 30, 1997, together with supplemental information on
Songlines, each prepared and attested to by the chief financial officer of
Songlines (the "Balance Sheets") and those arising in the ordinary course of
business since the date thereof. With regard to the foregoing, Songlines has
relied on the accuracy and completeness of the Schedule K-1 provided by the
Partnership.
Erickson shall have sole responsibility for filing all required tax
returns for Songlines for all periods ending on or prior to the Effective Date.
OSI shall assist Erickson in preparing income tax returns and shall cooperate
with Erickson to the extent necessary therefor, and Erickson shall provide OSI
with copies of all such returns at least fifteen (15) days prior to filing.
2.9 No Undisclosed Liabilities. There are no liabilities or obligations
of Songlines (other than material liabilities arising solely by reason of
Songlines's status as a partner in the Partnership) of any nature, whether
absolute, accrued, contingent or otherwise, other than liabilities or
obligations indicated in Item 2.9 of the Disclosure Schedules.
2.10 Title to Properties. Songlines has good and marketable title to
the assets reflected in their books and records as being owned by them, (except
as they have since been affected by transactions in the ordinary course of
business and consistent with past practices) the real and personal properties
reflected in the Balance Sheets (except for assets subject to financing leases
required to be capitalized under generally accepted accounting principles, all
of which are so reflected in the Balance Sheet or notes thereto) and all assets
purchased by Songlines since the date of the Balance Sheet, in each case free
and clear of any lien, claim or encumbrance, except as reflected in the Balance
Sheet or notes thereto and in Item 2.10 of the Disclosure Schedule and except
for liens for taxes, assessments or other governmental charges not yet due and
payable.
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Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by Songlines are properly reflected on
the applicable Balance Sheets and notes thereto.
2.11 Contracts. Excluding (i) contracts and commitments between Outback
or OSI and Songlines or the Partnership, (ii) contracts and commitments entered
into by the Partnership to which Outback or OSI is a party, (iii) contracts and
commitments entered into by Songlines in the ordinary course of the
Partnership's business without violation of the provisions of the Partnership
Agreement, and (iv) contracts and commitments entered into with the written
consent of OSI or Outback, Item 2.11 of the Disclosure Schedule is a complete
and accurate list of all of the contracts and commitments (including summaries
of oral contracts) to which Songlines is a party or by which Songlines is bound:
2.12 Litigation and Government Claims. Except as indicated in Item 2.12
of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against Songlines or the Partnership or to which any of
their business or assets is subject. Except as indicated in Item 2.12 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of Songlines or Erickson, contemplated or, to the best knowledge of
Songlines or Erickson, any basis for any unasserted claims (whether or not the
potential claimant may be aware of the claim) of any nature that might be
asserted against Songlines or the Partnership.
2.13 No Violation of Any Instrument. Except as indicated in Item 2.13
of the Disclosure Schedule, Songlines is not in violation of or default under
nor has any event occurred that, with the lapse of time or the giving of notice
or both, would constitute a violation of or default under or permit the
termination or the acceleration of maturity of or result in the imposition of a
lien, claim or encumbrance upon any property or asset of Songlines pursuant to,
the articles or certificates of incorporation, bylaws or other chartering or
governance document of Songlines or (excluding any of the following entered into
by the Partnership and to which Outback or OSI is a signatory or to which
Outback or OSI consented in writing or which were entered into by Songlines in
the ordinary course of business without violation of the provisions of the
Partnership Agreement) any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other material agreement or
instrument (including with customers), judgment, order, injunction or decree to
which Songlines is a party, by which Songlines is bound or to which any of the
assets of Songlines are subject.
2.14 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Texas with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of Songlines and Erickson of this Agreement, the Merger Agreement and the
other agreements executed or to be executed by them in connection with this
Agreement, and the consummation by Songlines and Erickson of the transactions
contemplated by this Agreement and the Merger Agreement, and the ownership and
operation by Outback of the respective businesses and properties of Songlines
after the Effective Date in substantially the same manner as now operated.
2.15 Compliance With Laws. Erickson has no actual knowledge that
Songlines or the Partnership are not in compliance with any such laws applicable
to their respective business, where failure
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to so comply would have a material adverse effect on their business, operations,
properties, assets or conditions.
2.16 Accuracy of Information Furnished. No representation or warranty
by Songlines or Erickson in this Agreement nor any information in the Financial
Statements or in the Disclosure Schedule contains any untrue statement of a
material fact or omits to state any material fact that would make the statements
herein or therein, in light of the circumstances under which they were made,
false or misleading. Each of Songlines and Erickson have disclosed to OSI and
Outback all facts known to them that are material to Songlines's and the
Partnership's respective businesses, operations, financial condition or
prospects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ERICKSON
In addition to the representations and warranties contained in ARTICLE
2, Erickson represents and warrants to OSI and Outback as follows:
3.1 Authority and Validity. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents they are executing or will execute in connection herewith or
therewith.
3.2 Binding Effect. This Agreement and the other documents executed or
to be executed by Erickson in connection with this Agreement have been or will
have been duly executed and delivered by him and are or will be, when executed
and delivered, their legal, valid and binding obligations enforceable in
accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
3.3 Ownership. Erickson is the sole record and beneficial shareholder
of Songlines and no other person has any rights (in any form) to acquire any
capital stock of Songlines.
3.4 Voting. He acknowledges that in his individual capacity as
shareholder and director of Songlines, he has voted in favor of the execution
and delivery of this Agreement and the Merger Agreement.
3.5 Residency. Erickson is, and has been at all times during the one
year ending on the date hereof, a resident of the State of Texas.
3.6 Compliance with Other Instruments. Neither the execution and
delivery by Erickson of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Erickson
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with
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customers), judgment order, injunction or decree by which Erickson is bound, to
which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to
Songlines and Erickson as follows:
4.1 Organization and Good Standing. OSI and Outback are corporations
duly organized, validly existing and in good standing under the laws of the
States of Delaware and Florida, respectively.
4.2 Foreign Qualification. Outback is duly qualified or licensed to do
business and in good standing as a foreign corporation in Texas and in every
other jurisdiction where the failure to so qualify could have a material adverse
effect on its respective business, operations, assets or financial condition.
4.3 Power and Authority. OSI and Outback each have the corporate power
and authority and all licenses and permits required by governmental authorities
to own, lease and operate their respective properties and assets and to carry on
their respective business as currently being conducted.
4.4 Authority and Validity. OSI and Outback each have the corporate
power and authority to execute, deliver and perform their respective obligations
under this Agreement, the Merger Agreement and the other documents executed or
to be executed by OSI and Outback in connection with this Agreement and the
execution, delivery and performance by OSI and Outback of this Agreement, the
Merger Agreement and the other documents executed or to be executed by OSI and
Outback in connection with this Agreement have been duly authorized by all
necessary corporate action.
4.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by OSI and Outback in connection with this
Agreement have been or will have been duly executed and delivered by OSI and
Outback and are or will be, when executed and delivered, the legal, valid and
binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
4.6 Compliance with Other Instruments. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 Capitalization of OSI. The authorized capital stock of OSI consists
of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par value and
Two Million (2,000,000) shares of
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Preferred Stock, $.01 par value, of which approximately 48,030,588 shares of
Common Stock and no shares of Preferred Stock were issued and outstanding as of
March 7, 1997. All of the issued and outstanding shares of OSI Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
The shares of OSI Common Stock to be issued in exchange for Songlines's capital
stock at the Effective Date, when issued and delivered, will be duly authorized,
validly issued, fully paid and nonassessable. As of the date hereof, except for
(i) employee and director stock options to acquire shares of OSI Common Stock
and (ii) employee stock ownership plans, there are no options, warrants or other
rights, agreements or commitments outstanding obligating Outback or OSI to issue
shares of its capital stock. All of the outstanding shares of capital stock of
Outback are owned by OSI, free and clear of any lien or encumbrance.
4.8 SEC Reports. OSI has delivered to Songlines and Erickson true and
complete copies of its (i) Annual Report on Form 10-K for the year ended
December 31, 1996; (ii) Proxy Statement used in connection with its 1997 Annual
Meeting of Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all
periodic reports, if any, on Form 8-K filed with the Securities and Exchange
Commission since December 31, 1996 to the date hereof; and (v) all Forms 10-Q,
if any, filed with the Securities and Exchange Commission since December 31,
1996, to the date hereof. Such documents and reports did not on their dates or
the date of filing, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. OSI has filed all material documents required to be filed by it
with the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to Songlines and Erickson. All financial statements and schedules
included in the documents referred to in this SECTION 4.8 were prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis except as noted therein and fairly present the information
purported to be shown therein.
4.9 Litigation and Government Claims. There is no pending suit, claim,
action or litigation or administrative, arbitration or other proceeding or
governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Texas with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities and (c) consents required to be obtained
from lessors, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
OSI and Outback of this Agreement, the Merger Agreement and the other agreements
executed or to be executed by either of them in connection with this Agreement
and the consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 Absence of Certain Changes or Events. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1996, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
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ARTICLE 5
JOINT COVENANTS OF SONGLINES, ERICKSON, OSI AND OUTBACK
Songlines and Erickson, jointly and severally, on the one hand, and OSI
and Outback, jointly and severally on the other hand, covenant with each other
as follows:
5.1 Notice of any Material Change. Until the Effective Date, each of
Songlines, Erickson, OSI and Outback shall, promptly after the first notice or
occurrence thereof but prior to the Effective Date, advise the others in writing
of any event or the existence of any state of facts that:
(a) would make any of its representations and warranties in this
Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in the
business, results of operation, working capital, assets, liabilities or
condition (financial or otherwise) of OSI, Outback or Songlines and their
respective subsidiaries, taken as a whole. No supplement or amendment to any
Disclosure Schedule shall have any effect for the purpose of determining the
satisfaction of or compliance with the conditions to the obligations of the
parties to consummate the Merger set forth elsewhere in this Agreement.
5.2 Cooperation. Until the Effective Date, each of the parties hereto
shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date and, in
any event, before the Closing Date, the approvals, authorizations and consents
necessary to consummate the transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other parties may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its control, all
conditions precedent to the obligations to close this Agreement.
5.3 Post-Closing Adjustment. As soon as practicable after the Effective
Date, but in no event more than forty-five (45) days thereafter, OSI shall
determine and report in writing to all parties hereto:
(a) the amount of current assets of Songlines as of the Effective Date;
(b) the amount of all liabilities of Songlines (other than liabilities
specified in Item 11.1 of the Songlines Disclosure Schedule to the extent
assumed by Outback) which were not paid in full prior to the Effective Date;
(c) the estimated amount of all federal and state taxes, including, but
not limited to, federal and state income taxes, payable by Songlines for the
short tax year ending on the Effective Date;
Upon receipt of such report, Erickson (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Erickson (and at the expense of
Erickson) shall meet and attempt to
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agree on the items to which objection was made. If such persons cannot agree
within thirty (30) days from the date of written objection, the items on which
agreement has not been reached shall be submitted to the Tampa, Florida office
of Price Waterhouse (or other agreed upon independent "Big Six" accounting firm)
for a resolution of such items and whose decision shall be final and binding on
all parties. The fees and expenses of Price Waterhouse (or other accounting
firm) shall be paid by the non-prevailing party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Erickson within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Erickson shall pay
such excess to OSI within ten (10) days of the final determination.
5.4 Distribution and Allocations. The parties acknowledge and agree
that notwithstanding the effective date of the Merger, Outback shall be entitled
to Songlines's entire share of Partnership distributions of cash flow, and shall
be allocated Songlines's shares of profit and loss, from and after October 1,
1997.
5.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take or cause to be
taken, all actions and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the appropriate vote of the
shareholders of Songlines.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of OSI and Outback and Erickson shall take all such
necessary action.
(c) Neither Outback, OSI, Songlines nor Erickson shall take any action
which would jeopardize the characterization of the Merger as a reorganization
within the meaning of Section 368(a) of the Code or the treatment of the Merger
for financial reporting purposes as a pooling of interests.
ARTICLE 6
COVENANTS OF SONGLINES AND ERICKSON
Songlines and Erickson covenant and agree with OSI as follows:
6.1 Securities Law Compliance. Erickson represents and warrants, and
covenants to Outback and OSI that:
(a) Erickson has received all schedules and exhibits and the documents
furnished to Songlines pursuant to SECTION 4.8;
(b) Erickson has had the opportunity to ask questions of and receive
answers from representatives of the management of OSI concerning the terms and
conditions of the transactions contemplated hereby and to obtain all additional
information that OSI possesses or could acquire without unreasonable expense
that is necessary to verify the accuracy of information furnished to Erickson.
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(c) OSI and Outback have furnished him with all information requested
and full access to materials concerning OSI and Outback which the Erickson
and/or his advisors deemed necessary to properly evaluate the Merger. Such
information and access have been made available and utilized to the extent
Erickson considers necessary and advisable in making an informed investment
decision, and Erickson has consulted his own tax advisor and understands the
evaluation of such materials may require the assistance of experts and Erickson
has utilized such experts to the extent deemed necessary.
(d) Erickson understands that the OSI Common Stock to be received is an
investment of a speculative nature and Erickson must bear the risks thereof for
an indefinite period of time. Erickson has adequate means for providing for his
needs, is able to bear the economic risk of the investment and has no need for
liquidity in the OSI Common Stock to be received in the Merger.
(e) Erickson and/or his representatives or advisors who have acted with
or on behalf of Erickson and who have advised Erickson in this matter have such
knowledge and experience in financial and business matters that Erickson is
capable of evaluating the merits and risks of the Merger for OSI Common Stock.
(f) Erickson is participating in the Merger solely for his account as a
private investment, and Erickson has no present agreement, understanding,
arrangement or intention to sell or transfer all or any portion of the shares of
OSI Common Stock to be issued in the Merger to any other person or persons.
Erickson does not presently intend to enter into any such agreement or
undertaking and there are no present circumstances which will compel Erickson to
sell any OSI Common Stock so received. Erickson will not sell or otherwise
transfer the shares (except for de minimis gifts of shares) unless they are
registered under the Securities Act and applicable state securities laws or, in
the opinion of OSI and its counsel, an exemption from registration is available
therefor.
(g) The investment by Erickson in OSI Common Stock pursuant to the
Merger is a suitable investment for Erickson given the investment goals and
objectives of Erickson.
(h) Erickson agrees to indemnify and hold OSI and Outback and each of
their respective officers, directors and advisors harmless against all liability
arising out of or in connection with any purchase, resale or distribution by
Erickson of any OSI Common Stock received hereby which is effected other than in
strict compliance with the terms hereof and applicable law.
(i) Erickson understands that the shares of OSI Common Stock to be
issued in the Merger will not be registered under the Securities Act, nor any
state securities laws, and such OSI Common Stock may not be sold or transferred
except in compliance with such laws. Erickson agrees to comply with the
restrictions on transfer contained in Section 6.2 hereof.
(j) Erickson understands that OSI will place an appropriate legend on
the certificate representing OSI Common Stock to be received restricting the
transfer of the shares and stop-transfer instructions will be given to the
transfer agent for the OSI Common Stock with respect to such certificates.
(k) Erickson is a natural person (i) whose net worth (the excess of
total assets over total liabilities), individually or jointly with his spouse,
exceeds $1,000,000 (inclusive of the value of home, home furnishings and
automobiles); or (ii) who had an Individual Annual Adjusted Gross Income in
excess of $200,000 in each of the two most recent tax years or joint income with
Erickson's spouse in excess of
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$300,000 in each of those years and reasonably expects to reach the same income
level in the current tax year.
6.2 Restriction on Transfer.
(a) Erickson covenants and agrees not to sell, convey, pledge, grant a
security interest in, assign or otherwise transfer or encumber any of the OSI
Common Stock to be issued in the Merger except in accordance with the following
provisions:
(i) Erickson may transfer twenty percent (20%) of the OSI
Common Stock received in the Merger at any time after October 1, 1998;
(ii) Erickson may transfer an additional twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
1999;
(iii) Erickson may transfer an additional twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
2000;
(iv) Erickson may transfer an additional twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
2001;
(v) Erickson may transfer the remaining twenty percent (20%)
of the OSI Common Stock received in the Merger at any time after October 1,
2002.
(b) Notwithstanding the provisions of (a) above, Erickson may make bona
fide gifts of OSI Common Stock to immediate family members or trusts of which
immediate family members are the exclusive beneficiaries provided, however, the
donees of such gifts shall take such OSI Common Stock subject to the
restrictions contained in (a) above. For purposes of determining Erickson's
compliance with (i) through (v) above, any transfers by donees shall be
aggregated with, and shall be considered as, transfers by Erickson for purposes
of calculating compliance with (i) through (v) of subsection (a).
(c) OSI's transfer agent shall maintain stop transfer instructions on
the OSI Common Stock issued in the Merger and the certificates representing such
shares shall bear an appropriate legend evidencing the restrictions contained in
(a) above.
6.3 Payment of Liabilities. Songlines and Erickson covenant and agree
that all debts and liabilities of Songlines relating to periods prior to the
Closing Date shall be paid or satisfied in full prior to the Effective Date,
except only current liabilities and those debts and liabilities of Songlines
specified in Item 11.1 of the Disclosure Schedules.
6.4 Pooling. Erickson agrees that until such time as financial results
of OSI covering at least thirty (30) days of combined operations of OSI and
Songlines subsequent to the Effective Date have been published, he will not sell
or otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
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ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with
Songlines and Erickson as follows:
7.1 Employment Agreements. Solely with respect to the Merger, and any
consequential termination of any partnership by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between the Partnership, as
employer, and the general managers of the Partnership's Outback Steakhouse(R)
restaurants, as employees. Outback shall succeed to all rights and obligations
of the Partnership under such Employment Agreements. Nothing contained herein
shall be construed as in any way limiting Outback's right to terminate any such
Employment Agreement as a result of any circumstance or event other than the
Merger and consequential termination of the Partnership by operation of law.
7.2 Assumed Liabilities. OSI and Outback agree to assume and pay the
liabilities specified in Item 11.1 (subject to the amount limits specified in
Item 11.1 of the Disclosure Schedules) and to indemnify and hold harmless
Erickson from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of Songlines, Erickson,
OSI and Outback to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions:
8.1 Consents to Transaction. Songlines, Outback and OSI shall have
received all consents or approvals and made all applications, requests, notices
and filings with, any person, governmental authority or governmental agency
required to be obtained or made in connection with the consummation of the
transactions contemplated by this Agreement. There shall have been obtained from
all state and local governments and governmental agencies all approvals and
consents necessary to enable Songlines and/or the Partnership, as applicable, to
transfer their liquor licenses and permits to Outback, to enable Outback to
assume such licenses and permits or to enable Outback to operate restaurants (of
the kind and quality customarily operated by Outback) using such permits or
licenses. Copies of all consents and approvals received by any party pursuant to
this SECTION 8.1 shall be furnished to the other party.
8.2 Absence of Litigation. No governmental agency or authority shall
have instituted or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and no order, judgment or decree by
any court or governmental agency or authority shall be in effect that enjoins,
restrains or prohibits the same or otherwise would materially interfere with the
operation of the assets and business of Songlines or the Partnership or OSI and
its subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
8.3 Dissenter's Rights. The number of shares of capital stock of
Songlines for which shareholders have exercised appraisal or dissenters' rights
under applicable law shall be a number which,
15
<PAGE> 20
in the sole and absolute discretion of OSI, does not jeopardize the financial
reporting and accounting treatment of the Merger specified in SECTION 1.12 or is
otherwise not contrary to the best interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SONGLINES
The obligations of Songlines and Erickson to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or before the Closing Date of each of the following conditions:
9.1 Compliance. OSI and Outback shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
OSI and Outback on or before the Closing Date.
9.2 Representations and Warranties. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to Songlines and Erickson
pursuant hereto or in connection with the transactions contemplated hereby,
shall have been true and correct in all material respects as of the date hereof
and shall be true and correct in all material respects at the Closing Date with
the same force and effect as if such representations and warranties had been
made at and as of the Closing Date, except for changes permitted or contemplated
by this Agreement.
9.3 Material Adverse Changes. Since the date hereof, there shall have
occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of OSI
and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 Compliance. Songlines and Erickson shall have or shall have caused
to be satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by any of them on or before the Closing Date.
10.2 Representations and Warranties. All of the representations and
warranties made by Songlines and/or Erickson in this Agreement, the Disclosure
Schedule, and in all certificates and other documents delivered by Songlines or
Erickson pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
16
<PAGE> 21
10.3 Current Financial Status. OSI shall have received the unaudited
financial statements of Songlines as of August 31, 1997, for the period then
ended.
10.4 Material Adverse Changes. Since December 31, 1996, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of
Songlines or the Partnership.
10.5 Pooling. OSI shall have received a letter from Deloitte & Touche,
in form and substance satisfactory to OSI and dated not more than five days
prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
ARTICLE 11
INDEMNIFICATION
Erickson, on the one hand, and OSI and Outback, jointly and severally,
on the other hand, agree as follows:
11.1 Indemnification Based on Agreement. Subject to the limitations
contained in SECTION 11.2 hereof, Erickson shall indemnify and hold harmless
OSI, Outback and Songlines, and OSI, Outback and Songlines, jointly and
severally, shall indemnify and hold harmless Erickson, against any losses,
claims, damages or liabilities to which such indemnified party may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any facts or circumstances that
would constitute a breach by the other of any representation, warranty or
covenant contained herein or in any agreement executed pursuant hereto and will
reimburse any legal or other expenses reasonably incurred by any indemnified
party in connection with investigating or defending any such loss, claim,
damage, liability or action.
In addition to the above, Erickson shall indemnify OSI, Outback and
Songlines, as provided in the first paragraph of this SECTION 11.1, against any
loss, claim, damage or liability arising out of (i) any tax liability of
Songlines for any period prior to and including October 1, 1997 and (ii) any
debt of Songlines (other than the debts specified in Item 11.1 of the Disclosure
Schedule to the extent assumed by Outback), and (iii) all claims, obligations,
causes of action and liabilities, of whatever kind or character, of any of
Songlines which arise out of or are based upon events first occurring on or
before the Effective Date, except only the liabilities assumed by Outback as
specified in Item 11.1 of the Disclosure Schedule.
11.2 Limitation. Erickson shall have no obligation under SECTION 11.1
to indemnify OSI, Outback or Songlines for any liability, loss, claim or damage
arising out of or based upon facts or actions first occurring after the
Effective Date. All obligations of indemnity (other than those relating to tax
obligations of Songlines under SECTION 11.1 above which shall continue for the
period specified in SECTION 12.4(B) hereof) shall terminate two (2) years from
the Closing Date; provided, however, the obligations of indemnity shall not
terminate with respect to any matter for which indemnification is claimed within
two (2) years from the Closing Date.
11.3 Cooperation. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
17
<PAGE> 22
11.4 Notice. An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of service
or summons to appear in any action begun in respect of which indemnity may be
sought hereunder. Failure to so notify the indemnifying party or parties shall
cause the indemnified party to be liable for any damage caused by failure to
give timely notice. The indemnifying party or parties may participate at their
own expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after receipt of
such notice, they may assume the defense of such action with counsel chosen by
the indemnifying party or parties and approved by the indemnified party in such
action, unless the indemnified party reasonably objects to such assumption on
the ground that its counsel has advised it that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party shall have
the right to employ counsel approved by the indemnifying party or parties. If
the indemnifying party or parties assume the defense of such action, the
indemnifying party or parties shall not be liable for fees and expenses of
counsel for the indemnified party incurred thereafter in connection with such
action. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel for the indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances
unless, in the reasonable opinion of such counsel, there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of Songlines:
(a) by mutual consent of Songlines and OSI;
(b) by OSI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of Songlines or Erickson set
forth herein or if there has been any material failure on the part of Songlines
or Erickson to comply with their obligations hereunder;
(c) by Songlines if there has been a material misrepresentation or
breach of warranty in the representations and warranties of OSI or Outback set
forth herein or if there has been any material failure on the part of OSI or
Outback to comply with its obligations hereunder;
(d) by either OSI, Songlines or Erickson, if the transactions
contemplated by this Agreement have not been consummated by October 31, 1997,
unless such failure of consummation is due to the failure of the terminating
party to perform or observe the covenants, agreements and conditions hereof to
be performed or observed by it at or before the Closing Date;
(e) by either OSI, or Songlines if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived by it at
or before the Closing Date; and
(f) by either Songlines or OSI if the transactions contemplated hereby
violate any nonappealable final order, decree or judgment of any court or
governmental body or agency having competent jurisdiction.
18
<PAGE> 23
12.2 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
12.3 Entire Agreement. This Agreement and the exhibits and Disclosure
Schedule hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 Survival of Representations and Warranties.
(a) The representations, warranties and indemnification obligations of
OSI and Outback contained herein or in any exhibit, certificate, document or
instrument delivered pursuant to this Agreement shall survive the Closing for a
period of two years; provided, however, that the obligations of OSI and Outback
under ARTICLE 7 and ARTICLE 11 hereof shall survive for the periods provided
therein.
(b) Except where otherwise specifically provided in this Agreement, the
representations, warranties and indemnification obligations of Erickson
contained herein or in any exhibit, schedule, certificate, document or
instrument delivered pursuant to this Agreement shall survive the Closing for a
period of three years from the Effective Date; provided, however, the
representations and warranties contained in SECTION 2.7 shall survive the
Closing for a period ending four years after the filing of Songlines's federal
income tax return for the period including the Effective Date.
12.5 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 Notices. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
If to Songlines or Erickson: SONGLINES, INC.
650 North Sam Houston Parkway East #219
Houston, Texas 77060
Attention: Stephen Erickson
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow
General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or
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<PAGE> 24
communication that is mailed, delivered or transmitted in the manner described
above shall be deemed sufficiently given, served, sent and received for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the affidavit of messenger or (with respect to a
telex) the answer back being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
12.7 Successors and Assigns. This Agreement and the rights, interests
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 Waiver and Other Action. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
12.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 Headings. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 Construction. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 Jurisdiction and Venue. The parties agree that any action brought
by either party against the other in any court, whether federal or state, shall
be brought within the State of Florida in the judicial circuit in which OSI has
its principal place of business. Each party hereby agrees to submit to the
personal jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
12.14 Enforcement. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 Further Assurances. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
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<PAGE> 25
12.16 Equitable Remedies. The parties hereto acknowledge that a refusal
by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
---------------------------- ------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- -------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
"Songlines"
Attest: SONGLINES, INC.
a Texas corporation
By: By:
----------------------------- -------------------------
Title: Secretary STEPHEN ERICKSON
Title: President
Witness: "Erickson"
----------------------------
STEPHEN ERICKSON
21
<PAGE> 26
EXHIBIT A
ARTICLES OF MERGER
THIS AGREEMENT, PLAN AND ARTICLES OF MERGER ("Articles of Merger"),
dated as of October 1, 1997, is entered into by and among SONGLINES, INC., a
Texas corporation ("Songlines"); OUTBACK STEAKHOUSE, INC., a Delaware
corporation ("OSI"); and OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation ("Outback").
W I T N E S S E T H:
WHEREAS, Songlines is a corporation duly organized and validly existing
under the laws of the State of Texas, and the authorized and outstanding capital
stock of Songlines is as follows:
<TABLE>
<CAPTION>
Authorized Shares Issued
Songlines Capital Stock and Outstanding
--------- ------------- ---------------
<S> <C> <C>
SONGLINES, INC. 1,000 Common Shares 500 Common Shares
</TABLE>
WHEREAS, OSI is a corporation duly organized and validly existing under
the laws of the State of Delaware; and
WHEREAS, OSI is authorized to issue 2,000,000 shares of Preferred
Stock, par value $.01, none of which are outstanding and 200,000,000 shares of
Common Stock, $.01 par value (the "OSI Common Stock"), of which approximately
48,030,588 shares of OSI Common Stock are issued and outstanding as of March 7,
1997; and
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, the respective Boards of Directors of each of Songlines,
Outback, and OSI deem it advisable, for the benefit of their respective
corporations and shareholders, that Songlines be merged into Outback, with
Outback as the surviving corporation (in its capacity as surviving corporation,
Outback is hereinafter sometimes referred to as the "Surviving Corporation"),
pursuant to the provisions of Sections 607.1101-607.1107 of the Florida Business
Corporation Act (the "Florida Act") and the laws of the State of Texas ("Texas
Law"), and have approved these Articles of Merger; and
WHEREAS, the Board of Directors of Songlines has directed that these
Articles of Merger be submitted to its voting shareholder for approval and
adoption and the voting shareholder of Songlines has approved and adopted these
Articles of Merger in accordance with Texas Law and the corporate governance
documents of Songlines by unanimous written consent dated September , 1997;
and
WHEREAS, OSI as the sole shareholder of Outback has approved and
adopted these Articles of Merger by written consent on September 30, 1997; and
WHEREAS, the Agreement and Plan of Reorganization (the "Reorganization
Agreement"), which Outback, OSI, and Songlines have entered, contemplates the
execution and delivery of these Articles of Merger.
A-1
<PAGE> 27
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for the purpose of prescribing the terms and
conditions of the merger and such other details and provisions as are deemed
necessary or desirable, the parties hereto agree as follows:
MERGER. The names of the corporations which propose to merge are
SONGLINES, INC., a Texas corporation ("Songlines"), and OUTBACK STEAKHOUSE OF
FLORIDA, INC. ("Outback"). In accordance with the provisions of the Florida Act
and Texas Law at the Effective Date (as hereinafter defined), Songlines shall be
merged into Outback, and Outback shall be the Surviving Corporation and as such
shall continue to be governed by the laws of the State of Florida. The plan of
merger set forth in these Articles of Merger was duly authorized by each of
Outback and Songlines, respectively, by all action required by the laws under
which it was incorporated or organized and by its constituent documents.
1. CONTINUATION OF CORPORATE EXISTENCE. The corporate existence and
identity of Outback, with all its purposes, powers, franchises, privileges,
rights and immunities, shall continue unaffected and unimpaired by the merger
and the corporate existence and identity of Songlines with all its purposes,
powers, franchises, privileges, rights and immunities at the Effective Date
shall be merged with and into that of Outback, and Outback as the Surviving
Corporation shall be vested fully therewith, and the separate corporate
existence and identity of Songlines shall thereafter cease except to the extent
continued by statute.
2. EFFECTIVE DATE. The merger shall become effective (hereinbefore and
hereinafter called the "Effective Date") upon the later of (i) filing of these
Articles of Merger with the Secretary of State of the State of Florida and the
Secretary of State of the State of Texas; or (ii) October 1, 1997. Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Texas pursuant to the Florida Act and Texas Law.
3. CORPORATE GOVERNMENT.
(a) The Certificate of Incorporation of Outback, as in effect
on the Effective Date, shall continue in full force and effect and
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Outback, as in effect as of the Effective
Date, shall continue in full force and effect and shall be the Bylaws
of the Surviving Corporation.
(c) The members of the Board of Directors and the officers of
the Surviving Corporation shall be the persons holding such positions
for Outback as of the Effective Date.
4. CONVERSION OF SHARES. The manner and basis of converting the capital
stock of Songlines into OSI Common Stock, subject to SECTION 5(C) below with
respect to fractional shares, shall be as follows:
(a) Each share of Songlines common stock which shall be
outstanding immediately prior to the Effective Date shall at the
Effective Date, by virtue of the merger and without any action on the
part of the holder thereof, be converted into and exchanged for 22.084
shares of OSI Common Stock.
(b) The Outback Capital Stock outstanding immediately prior to
the Effective Date shall be unaffected by the merger.
A-2
<PAGE> 28
(c) The stock transfer books of Songlines shall be closed as
of the close of business on the Effective Date and no transfer of
record of any of its capital stock shall take place thereafter.
(d) No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead one whole share
of OSI Common Stock shall be issued to each holder of shares of common
stock of the merging corporations whose fractional share interest is .5
or more of one whole share; each fraction of less than .5 of one whole
share shall be disregarded.
(e) Notwithstanding the foregoing, the OSI shall not be
required to issue or distribute more than 142,792 shares of OSI Common
Stock pursuant to the merger, less any shares reserved for dissenters'
rights, as described in Article 1 of the Reorganization Agreement.
(f) All of the shares of OSI Common Stock, when delivered
pursuant to the provisions of these Articles of Merger, shall be
validly issued, fully paid and nonassessable.
(g) At the Effective Date, each holder of certificates
representing shares of the common stock of Songlines shall thereupon
cease to have any rights with respect to such shares and shall be
deemed to be a shareholder of OSI to the extent of the number of shares
of OSI Common Stock to which such shareholder shall be entitled in
accordance with these Articles of Merger; and shall surrender
certificates representing shares of the common stock of Songlines to
the OSI, whereupon such holder shall receive a certificate or
certificates for the number of shares of OSI Common Stock to which such
holder is entitled hereunder.
5. RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under the laws of the
State of Florida.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of Outback, and Songlines and all property, real, personal and
mixed and all debts due on whatever account, including subscription to
shares and all other chooses in action and every other interest of or
belonging or due to Songlines shall be taken and deemed to be
transferred or invested in the Surviving Corporation without further
act or deed.
(c) At the Effective Date, the Surviving Corporation shall
thenceforth be responsible and liable for all liabilities and
obligations of Songlines and any claim existing or action or proceeding
pending by or against Songlines or Outback may be prosecuted as if the
merger had not occurred or the Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor any liens upon the
property of Songlines or Outback shall be impaired by the merger.
6. CONSENT OF SHAREHOLDERS. These Articles of Merger has been adopted
by the shareholders of Songlines in accordance with Texas Law and its corporate
governance documents by unanimous written consent effective as of , 1997.
These Articles of Merger has been adopted by the written consent of the sole
shareholder of Outback dated September 30, 1997 pursuant to the Florida Act.
A-3
<PAGE> 29
7. DISSENTING SHAREHOLDERS. If any shareholder of Songlines files a
written objection to these Articles of Merger before a vote of the shareholders
is taken hereon and complies with the further provisions of the Florida Act or
Texas Law, as applicable, he may be paid the fair value of his shares. If any
shareholder of Songlines lawfully elects, pursuant to the Florida Act or Texas
Law, as applicable, to exercise or pursue his right to dissent from any of the
corporate actions referred to in these Articles of Merger with respect to the
shares of common stock of Songlines owned by such shareholder (the "Dissenting
Shares"), such shareholder shall be entitled to exercise only those rights
available to him as set forth in the Florida Act or Texas Law, as applicable,
and, in that event, only in the manner set forth therein. During the period in
which any such shareholder shall be exercising or pursuing any of such
shareholder's rights of dissent as specified in the Florida Act or Texas Law, as
applicable, such shareholder shall have no other rights pursuant to or arising
from these Articles of Merger.
8. REORGANIZATION AGREEMENT. These Articles of Merger is intended to
supplement the Reorganization Agreement and is not intended to conflict with or
supersede that agreement and, in the event of any conflict, the provisions of
the Reorganization Agreement shall control.
9. COPIES. A copy of these Articles of Merger shall be on file at the
principal place of business of the Surviving Corporation located at 550 North
Reo Street, Suite 200, Tampa, Florida 33609. A copy of these Articles of Merger
will be furnished by the Surviving Corporation, on request and without cost, to
any shareholder of any corporation that is a party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement, Plan
and Articles of Merger as of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
--------------------------- ---------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
A-4
<PAGE> 30
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came ROBERT D.
BASHAM and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE, INC., a Delaware corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL) ------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
---------------------- --------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came PAUL E.
AVERY and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE OF FLORIDA, INC., a Florida corporation, who are personally known to
me, and each being first duly sworn, did depose and say that they executed the
foregoing on behalf of said corporation by order of the Board of Directors of
said corporation.
(NOTARY SEAL) ------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------
A-5
<PAGE> 31
"Songlines"
Attest: SONGLINES, INC.
a Texas corporation
By: By:
---------------------- ---------------------------
Title: Secretary STEPHEN ERICKSON
Title: President
STATE OF TEXAS )
) ss
COUNTY OF )
On this ______ day of October, 1997, before me, personally came STEPHEN
ERICKSON and ___________________________, President and Secretary, respectively,
of SONGLINES, INC., a Texas corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL) -------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
----------------
A-6
<PAGE> 32
EXHIBIT B
DISCLOSURE SCHEDULES
Item 2.7 Any asset acquired or disposed of, or indebtedness incurred,
assumed, guaranteed, endorsed, paid or discharged; any material
amount of assets subjected or permitted to be subjected to any
liability or obligation or to any lien, claim or encumbrance of
any kind, except in the ordinary course of business or pursuant
to agreements in force at the date of this Agreement and
identified below:
None.
Item 2.9(a) Material liabilities or obligations, contingent or otherwise of
the Partnership of any nature:
None.
Item 2.9(b) Liabilities or obligations of Songlines (other than material
liabilities arising solely by reason of Songlines's status as a
partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise:
None.
Item 2.10 Liens and encumbrances on real and personal property purchased
by Songlines or the Partnership since the date of the Balance
Sheet, except for liens for taxes, assessments or other
governmental charges not yet due and payable.
None.
Item 2.11 Contracts and commitments not in the ordinary course of the
Partnership's business.
None.
Item 2.12 Pending suits, claims, actions or litigation or administrative,
arbitration or other proceedings or governmental investigations
or inquiries against Songlines or the Partnership to which any
of their business or assets is subject.
None.
B-1
<PAGE> 33
Item 2.13 Violations and defaults of Songlines and the Partnership.
None.
Item 11.1 Current liabilities and those debts and liabilities of
Songlines agreed to be assumed by Outback:
None.
08/07/97
B-2
<PAGE> 1
EXHIBIT 4.24
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
AND
STONE, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - PLAN OF ACQUISITION...................................................................................1
1.1 The Merger......................................................................................1
1.2 Adjustments.....................................................................................2
1.3 Closing.........................................................................................2
1.4 Execution and Delivery of Closing Documents.....................................................2
1.5 Execution and Filing of Merger Documents........................................................3
1.6 Effectiveness of Merger.........................................................................3
1.7 Further Assurances..............................................................................3
1.8 Certificates....................................................................................3
1.9 Closing of Transfer Books.......................................................................3
1.10 Fractional Shares...............................................................................3
1.11 Accounting Treatment............................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SI AND STONE........................................................3
2.1 Organization and Good Standing..................................................................3
2.2 Power and Authority.............................................................................4
2.3 Authority and Validity..........................................................................4
2.4 Binding Effect..................................................................................4
2.5 Compliance with Other Instruments...............................................................4
2.6 Capitalization of SI............................................................................4
2.7 Absence of Certain Changes......................................................................5
2.8 Tax Liabilities.................................................................................5
2.9 No Undisclosed Liabilities......................................................................6
2.10 Title to Properties.............................................................................6
2.11 Contracts.......................................................................................6
2.12 Litigation and Government Claims................................................................6
2.13 No Violation of Any Instrument..................................................................7
2.14 Necessary Approvals and Consents................................................................7
2.15 Compliance With Laws............................................................................7
2.16 Accuracy of Information Furnished...............................................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF STONE...............................................................7
3.1 Authority and Validity..........................................................................8
3.2 Binding Effect..................................................................................8
3.3 Ownership.......................................................................................8
3.4 Voting..........................................................................................8
3.5 Residency.......................................................................................8
3.6 Compliance with Other Instruments...............................................................8
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK.....................................................8
4.1 Organization and Good Standing..................................................................8
4.2 Foreign Qualification...........................................................................8
4.3 Power and Authority.............................................................................8
4.4 Authority and Validity..........................................................................9
4.5 Binding Effect..................................................................................9
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.6 Compliance with Other Instruments...............................................................9
4.7 Capitalization of OSI...........................................................................9
4.8 SEC Reports.....................................................................................9
4.9 Litigation and Government Claims...............................................................10
4.10 Necessary Approvals and Consents...............................................................10
4.11 Absence of Certain Changes or Events...........................................................10
ARTICLE 5 - JOINT COVENANTS OF SI, STONE, OSI AND OUTBACK........................................................10
5.1 Notice of any Material Change..................................................................10
5.2 Cooperation....................................................................................11
5.3 Post-Closing Adjustment........................................................................11
5.4 Distribution and Allocations...................................................................11
5.5 Additional Agreements..........................................................................11
ARTICLE 6 - COVENANTS OF SI AND STONE............................................................................12
6.1 Securities Law Compliance. ....................................................................12
6.2 Restriction on Transfer. ......................................................................13
6.3 Payment of Liabilities.........................................................................14
6.4 Pooling........................................................................................14
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK.........................................................................14
7.1 Employment Agreements..........................................................................14
7.2 Assumed Liabilities............................................................................14
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS....................................................15
8.1 Consents to Transaction........................................................................15
8.2 Absence of Litigation..........................................................................15
8.3 Dissenter's Rights.............................................................................15
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF SI............................................................15
9.1 Compliance.....................................................................................15
9.2 Representations and Warranties.................................................................15
9.3 Material Adverse Changes.......................................................................16
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK..............................................16
10.1 Compliance.....................................................................................16
10.2 Representations and Warranties.................................................................16
10.3 Current Financial Status.......................................................................16
10.4 Material Adverse Changes.......................................................................16
10.5 Pooling........................................................................................16
ARTICLE 11 - INDEMNIFICATION.....................................................................................16
11.1 Indemnification Based on Agreement. .........................................................16
11.2 Limitation.....................................................................................17
11.3 Cooperation....................................................................................17
11.4 Notice.........................................................................................17
ARTICLE 12 - MISCELLANEOUS.......................................................................................18
12.1 Termination....................................................................................18
12.2 Expenses.......................................................................................18
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
12.3 Entire Agreement...............................................................................18
12.4 Survival of Representations and Warranties.....................................................18
12.5 Counterparts...................................................................................19
12.6 Notices........................................................................................19
12.7 Successors and Assigns.........................................................................19
12.8 Governing Law..................................................................................19
12.9 Waiver and Other Action........................................................................19
12.10 Severability...................................................................................19
12.11 Headings.......................................................................................20
12.12 Construction...................................................................................20
12.13 Jurisdiction and Venue.........................................................................20
12.14 Enforcement....................................................................................20
12.15 Further Assurances.............................................................................20
12.16 Equitable Remedies.............................................................................20
EXHIBIT A
ARTICLES OF MERGER.....................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...................................................................................B-1
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of the 1st day of October, 1997, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), STONE, INC., a Virginia corporation
("SI") and BENJAMIN J. STONE, III, an individual residing in the State of
Virginia ("Stone").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Stone is the sole owner of the issued and outstanding common
stock of SI, and Stone is the sole director, President and is responsible for
the day-to-day operations of SI; and
WHEREAS, Outback and SI have entered into that certain Florida limited
partnership known as Outback/Stone-II, Limited Partnership ("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
States of Virginia, Maryland and West Virginia; and
WHEREAS, the Board of Directors of SI has approved the merger of SI
into Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, SI will be merged with and into
Outback and all of the outstanding shares of capital stock of SI will be
converted into shares of Common Stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 The Merger. Subject to and upon the terms and conditions contained
herein, SI shall be merged with and into Outback, with Outback being the
surviving corporation, in accordance with the Articles of Merger substantially
in the form attached to this Agreement as EXHIBIT A (the "Merger Agreement"),
which will be executed and delivered by OSI, Outback, and SI prior to the
Merger. As a result of the Merger, each voting and nonvoting common share of SI
outstanding immediately before the Effective Date (as herein defined) shall, by
virtue of the Merger and without any further action being
1
<PAGE> 6
required by the holders thereof, be converted into and exchanged for 285.584
shares of OSI Common Stock.
1.2 Adjustments.
(a) Except as otherwise provided in this SECTION 1.2, the total number
of shares of OSI Common Stock to be issued pursuant to the Merger shall be One
Hundred Forty-Two Thousand Seven Hundred Ninety-Two (142,792).
(b) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, (i) the outstanding shares of capital stock
of SI shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, or readjustment, with a record date within such
period, or a stock dividend thereon shall be declared with a record date within
such period or (ii) SI shall have issued additional shares of its capital stock,
the number of shares of OSI Common Stock received in exchange for each share of
SI's capital stock shall be adjusted so that the aggregate number of shares of
OSI Common Stock received in exchange for all shares of SI's capital stock
(assuming no Dissenting Shares) remains at 142,792.
(c) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, the outstanding shares of OSI Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such period,
the number of shares of OSI Common Stock received in exchange for each share of
capital stock of SI (as specified in SECTION 1.1 hereof) shall be adjusted to
accurately reflect such change.
1.3 Closing. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on October 1, 1997, or on such date and at
such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than October
31, 1997, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 Execution and Delivery of Closing Documents. Before the Closing,
each party shall cause to be prepared and at the Closing the parties shall
execute and deliver each agreement and instrument required by this Agreement or
the Merger Agreement to be so executed and delivered and not theretofore
accomplished. At the Closing, each party also shall execute and deliver such
other appropriate and customary documents as the other parties reasonably may
request for the purpose of consummating the transactions contemplated by this
Agreement and the Merger Agreement. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
2
<PAGE> 7
1.5 Execution and Filing of Merger Documents. At the time of completion
of the Closing, OSI, Outback, SI and Stone agree to take the following actions:
(a) to execute and deliver all documents and certificates relating to
the Merger required to be executed by them that have not already been so
executed and that are required under applicable federal, state and local laws to
be filed in order validly to effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary of State
of the State of Florida and the Secretary of State of the State of Virginia and
a Certificate of Merger to be issued by each such officer.
1.6 Effectiveness of Merger. The Merger shall become effective under
the laws of Florida upon the later of (i) filing of these Articles of Merger
with the Secretary of State of the State of Florida and the Secretary of State
of the State of Virginia; or (ii) October 1, 1997 (the "Effective Date"). Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Virginia pursuant to the Florida Act and Virginia Law.
1.7 Further Assurances. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional actions
as may reasonably be deemed necessary or advisable by any party in order to
consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of SI as existed immediately before the Effective Date.
1.8 Certificates. As soon as practicable after the Effective Date, OSI
shall make available and each holder of capital stock of SI shall be entitled to
receive upon surrender of stock certificates of SI representing SI capital stock
for cancellation, certificates representing the number of shares of OSI Common
Stock into which such shares are converted in the Merger as provided in SECTION
1.1 hereof. The OSI Common Stock into which such SI capital stock is converted
shall be deemed issued at the Effective Date.
1.9 Closing of Transfer Books. At the Closing Date, the stock transfer
books of SI shall be closed and no transfer of capital stock of SI, shall
thereafter be made.
1.10 Fractional Shares. No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead, one whole share of OSI
Common Stock shall be issued for each fractional share of .5 or more of one
whole share and each fractional share of less than .5 of one whole share shall
be disregarded.
1.11 Accounting Treatment. It is the intention of the parties hereto
that the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SI AND STONE
Each of SI and Stone, jointly and severally, represent and warrant to
OSI and Outback as follows:
2.1 Organization and Good Standing. SI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Virginia.
3
<PAGE> 8
2.2 Power and Authority. SI has the requisite power and authority and
all material licenses and permits required by governmental authorities to own,
lease and operate its properties and assets and to carry on its businesses as
currently being conducted.
2.3 Authority and Validity.
(a) SI has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Merger Agreement and the other
documents executed or to be executed by SI in connection with this Agreement;
and the execution, delivery and performance by SI of this Agreement, the Merger
Agreement and the other documents executed or to be executed by SI in connection
with this Agreement have been duly authorized by all necessary corporate action.
The execution, delivery and performance by SI of this Agreement, the Merger
Agreement and any other documents executed or to be executed in connection with
this Agreement and the consummation of the transactions provided for herein have
been duly authorized and approved by the board of directors and shareholders of
SI as required under the laws of the State of Virginia and SI's corporate
governance documents.
(b) Stone has the power and authority to execute, deliver and perform
his obligations under this Agreement and the other documents executed or to be
executed by Stone in connection with this Agreement.
2.4 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by SI and Stone in connection with this
Agreement have been or will have been duly executed and delivered by SI and
Stone, and are or will be, when executed and delivered, the legal, valid and
binding obligations of each of SI and Stone enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
2.5 Compliance with Other Instruments. Neither the execution and
delivery by SI nor Stone of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of SI or
Stone pursuant to, its articles of incorporation, bylaws, partnership agreement,
operating agreement or other charter or governance document, or any note, bond,
indenture, mortgage, deed of trust, evidence of indebtedness, loan or lease
agreement, other agreement or instrument (including with customers), judgment,
order, injunction or decree by which SI or Stone is bound, to which any of them
is a party, or to which any assets of any of them are subject; provided,
however, this SECTION 2.5 shall not apply with respect to any of the foregoing
if SI is bound thereby, a party thereto, or its assets subject, solely by reason
of its status as a partner in the Partnership.
2.6 Capitalization of SI.
(a) The authorized capital stock of SI consists of Ten Thousand
(10,000) common shares. There are Five Hundred (500) common shares issued and
outstanding, all of which are owned by Stone. There are no other shareholders of
SI and no other persons with rights or options to acquire capital stock
4
<PAGE> 9
of SI. All of the issued and outstanding shares of capital stock of SI have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no shares of capital stock of SI held in its treasury.
(b) There are no voting trusts, shareholder agreements or other voting
arrangements among the shareholders of SI.
(c) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating SI to
issue, sell, exchange or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of SI.
2.7 Absence of Certain Changes. From December 31, 1996 to the Closing
Date, (except solely as a result of SI's status as a partner in the Partnership)
SI has not:
(a) suffered any material adverse change in its business, results of
operations, working capital, assets, liabilities, or condition (financial or
otherwise) or the manner of conducting its business;
(b) suffered any material damage or destruction to or loss of its
assets not covered by insurance, or any loss of suppliers or employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material amount of
assets to any lien, claim or encumbrance of any kind, except in the ordinary
course of business or pursuant to agreements in force at the date of this
Agreement and identified in Item 2.7 of the Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or permitted to
lapse any material rights or claims;
(e) entered into or terminated any lease, agreement, commitment or
transaction, or agreed to or made any changes in any leases or agreements, other
than transactions and commitments entered into in the ordinary course of
business;
(f) written up, written down or written off the book value of any
assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or contributed
to any employee benefit plan;
(j) entered into any employment, consulting, compensation or collective
bargaining agreement with any person or group, except oral employment agreements
which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan or
severance agreements.
5
<PAGE> 10
2.8 Tax Liabilities. SI has filed all federal, state, county, local and
foreign tax returns and reports required to be filed by them by the date hereof,
including those with respect to income, payroll, property, withholding, social
security, unemployment, franchise, excise and sales taxes; SI has either paid in
full all taxes that have become due as reflected on any return or report and any
interest and penalties with respect thereto or have fully accrued on their books
or have established adequate reserves for all taxes payable but not yet due; and
have made cash deposits with appropriate governmental authorities representing
estimated payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time within
which to file any return has been granted to SI with respect to any tax. No
unsatisfied deficiency, delinquency or default for any tax, assessment or
governmental charge has been claimed, proposed or assessed against SI nor has SI
received notice of any such deficiency, delinquency or default. SI has no reason
to believe that SI has or may have any tax liabilities other than those
reflected on the unaudited balance sheet of SI as of August 30, 1997, with any
notes thereto, and the related unaudited statements of income for the eight
months ended August 30, 1997, together with supplemental information on SI, each
prepared and attested to by the chief financial officer of SI (the "Balance
Sheets") and those arising in the ordinary course of business since the date
thereof. With regard to the foregoing, SI has relied on the accuracy and
completeness of the Schedule K-1 provided by the Partnership.
Stone shall have sole responsibility for filing all required tax
returns for SI for all periods ending on or prior to the Effective Date. OSI
shall assist Stone in preparing income tax returns and shall cooperate with
Stone to the extent necessary therefor, and Stone shall provide OSI with copies
of all such returns at least fifteen (15) days prior to filing.
2.9 No Undisclosed Liabilities. There are no liabilities or obligations
of SI (other than material liabilities arising solely by reason of SI's status
as a partner in the Partnership) of any nature, whether absolute, accrued,
contingent or otherwise, other than liabilities or obligations indicated in Item
2.9 of the Disclosure Schedules.
2.10 Title to Properties. SI has good and marketable title to the
assets reflected in their books and records as being owned by them, (except as
they have since been affected by transactions in the ordinary course of business
and consistent with past practices) the real and personal properties reflected
in the Balance Sheets (except for assets subject to financing leases required to
be capitalized under generally accepted accounting principles, all of which are
so reflected in the Balance Sheet or notes thereto) and all assets purchased by
SI since the date of the Balance Sheet, in each case free and clear of any lien,
claim or encumbrance, except as reflected in the Balance Sheet or notes thereto
and in Item 2.10 of the Disclosure Schedule and except for liens for taxes,
assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by SI are properly reflected on the
applicable Balance Sheets and notes thereto.
2.11 Contracts. Excluding (i) contracts and commitments between Outback
or OSI and SI or the Partnership, (ii) contracts and commitments entered into by
the Partnership to which Outback or OSI is a party, (iii) contracts and
commitments entered into by SI in the ordinary course of the Partnership's
business without violation of the provisions of the Partnership Agreement, and
(iv) contracts and commitments entered into with the written consent of OSI or
Outback, Item 2.11 of the Disclosure Schedule is a complete and accurate list of
all of the contracts and commitments (including summaries of oral contracts) to
which SI is a party or by which SI is bound:
6
<PAGE> 11
2.12 Litigation and Government Claims. Except as indicated in Item 2.12
of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against SI or the Partnership or to which any of their
business or assets is subject. Except as indicated in Item 2.12 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of SI or Stone, contemplated or, to the best knowledge of SI or Stone,
any basis for any unasserted claims (whether or not the potential claimant may
be aware of the claim) of any nature that might be asserted against SI or the
Partnership.
2.13 No Violation of Any Instrument. Except as indicated in Item 2.13
of the Disclosure Schedule, SI is not in violation of or default under nor has
any event occurred that, with the lapse of time or the giving of notice or both,
would constitute a violation of or default under or permit the termination or
the acceleration of maturity of or result in the imposition of a lien, claim or
encumbrance upon any property or asset of SI pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of SI or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by SI in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
customers), judgment, order, injunction or decree to which SI is a party, by
which SI is bound or to which any of the assets of SI are subject.
2.14 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida, Virginia, Maryland
and West Virginia with respect to effectuating the Merger, (b) consents required
to be obtained from applicable liquor control authorities, (c) consents required
to be obtained from lessors, and (d) under the provisions of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or state
securities or blue sky laws, no authorization, consent, permit or license or
approval of or declaration, registration or filing with, any person or
governmental or regulatory authority or agency is necessary for the execution
and delivery by each of SI and Stone of this Agreement, the Merger Agreement and
the other agreements executed or to be executed by them in connection with this
Agreement, and the consummation by SI and Stone of the transactions contemplated
by this Agreement and the Merger Agreement, and the ownership and operation by
Outback of the respective businesses and properties of SI after the Effective
Date in substantially the same manner as now operated.
2.15 Compliance With Laws. Stone has no actual knowledge that SI or the
Partnership are not in compliance with any such laws applicable to their
respective business, where failure to so comply would have a material adverse
effect on their business, operations, properties, assets or conditions.
2.16 Accuracy of Information Furnished. No representation or warranty
by SI or Stone in this Agreement nor any information in the Financial Statements
or in the Disclosure Schedule contains any untrue statement of a material fact
or omits to state any material fact that would make the statements herein or
therein, in light of the circumstances under which they were made, false or
misleading. Each of SI and Stone have disclosed to OSI and Outback all facts
known to them that are material to SI's and the Partnership's respective
businesses, operations, financial condition or prospects.
7
<PAGE> 12
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF STONE
In addition to the representations and warranties contained in ARTICLE
2, Stone represents and warrants to OSI and Outback as follows:
3.1 Authority and Validity. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents they are executing or will execute in connection herewith or
therewith.
3.2 Binding Effect. This Agreement and the other documents executed or
to be executed by Stone in connection with this Agreement have been or will have
been duly executed and delivered by him and are or will be, when executed and
delivered, their legal, valid and binding obligations enforceable in accordance
with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
3.3 Ownership. Stone is the sole record and beneficial shareholder of
SI and no other person has any rights (in any form) to acquire any capital stock
of SI.
3.4 Voting. He acknowledges that in his individual capacity as
shareholder and director of SI, he has voted in favor of the execution and
delivery of this Agreement and the Merger Agreement.
3.5 Residency. Stone is, and has been at all times during the one year
ending on the date hereof, a resident of the State of Virginia.
3.6 Compliance with Other Instruments. Neither the execution and
delivery by Stone of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Stone
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Stone is bound,
to which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to SI and
Stone as follows:
4.1 Organization and Good Standing. OSI and Outback are corporations
duly organized, validly existing and in good standing under the laws of the
States of Delaware and Florida, respectively.
4.2 Foreign Qualification. Outback is duly qualified or licensed to do
business and in good standing as a foreign corporation in Virginia, Maryland and
West Virginia and in every other jurisdiction where the failure to so qualify
could have a material adverse effect on its respective business, operations,
assets or financial condition.
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4.3 Power and Authority. OSI and Outback each have the corporate power
and authority and all licenses and permits required by governmental authorities
to own, lease and operate their respective properties and assets and to carry on
their respective business as currently being conducted.
4.4 Authority and Validity. OSI and Outback each have the corporate
power and authority to execute, deliver and perform their respective obligations
under this Agreement, the Merger Agreement and the other documents executed or
to be executed by OSI and Outback in connection with this Agreement and the
execution, delivery and performance by OSI and Outback of this Agreement, the
Merger Agreement and the other documents executed or to be executed by OSI and
Outback in connection with this Agreement have been duly authorized by all
necessary corporate action.
4.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by OSI and Outback in connection with this
Agreement have been or will have been duly executed and delivered by OSI and
Outback and are or will be, when executed and delivered, the legal, valid and
binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
4.6 Compliance with Other Instruments. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 Capitalization of OSI. The authorized capital stock of OSI consists
of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par value and
Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of which
approximately 48,030,588 shares of Common Stock and no shares of Preferred Stock
were issued and outstanding as of March 7, 1997. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for SI's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, except for (i) employee and director stock
options to acquire shares of OSI Common Stock and (ii) employee stock ownership
plans, there are no options, warrants or other rights, agreements or commitments
outstanding obligating Outback or OSI to issue shares of its capital stock. All
of the outstanding shares of capital stock of Outback are owned by OSI, free and
clear of any lien or encumbrance.
4.8 SEC Reports. OSI has delivered to SI and Stone true and complete
copies of its (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Proxy Statement used in connection with its 1997 Annual Meeting of
Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all periodic
reports, if any, on Form 8-K filed with the Securities and Exchange Commission
since December 31, 1996 to the date hereof; and (v) all Forms 10-Q, if any,
filed with the Securities and Exchange Commission since
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EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders of
Outback Steakhouse, Inc.
Tampa, Florida
We consent to the incorporation by reference in this Annual Report of Outback
Steakhouse, Inc., (the "Company") on Form 10-K of our report on the Consolidated
Financial Statements of the Company dated February 20, 1998 in the Company's
Annual Report to Shareholders.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tampa, Florida
March 27, 1998
<PAGE> 15
December 31, 1996, to the date hereof. Such documents and reports did not on
their dates or the date of filing, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. OSI has filed all material documents required to be
filed by it with the SEC and all such documents complied as to form with the
applicable requirements of law. Copies of all other reports filed by OSI with
the SEC from the date hereof to and including the Effective Date have been or
will be delivered to SI and Stone. All financial statements and schedules
included in the documents referred to in this SECTION 4.8 were prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis except as noted therein and fairly present the information
purported to be shown therein.
4.9 Litigation and Government Claims. There is no pending suit, claim,
action or litigation or administrative, arbitration or other proceeding or
governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida, Virginia, Maryland
and West Virginia with respect to effectuating the Merger, (b) consents required
to be obtained from applicable liquor control authorities and (c) consents
required to be obtained from lessors, no authorization, consent, permit or
license or approval of or declaration, registration or filing with, any person
or governmental or regulatory authority or agency is necessary for the execution
and delivery by OSI and Outback of this Agreement, the Merger Agreement and the
other agreements executed or to be executed by either of them in connection with
this Agreement and the consummation by OSI and Outback of the transactions
contemplated by this Agreement and the Merger Agreement.
4.11 Absence of Certain Changes or Events. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1996, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF SI, STONE, OSI AND OUTBACK
SI and Stone, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally on the other hand, covenant with each other as
follows:
5.1 Notice of any Material Change. Until the Effective Date, each of
SI, Stone, OSI and Outback shall, promptly after the first notice or occurrence
thereof but prior to the Effective Date, advise the others in writing of any
event or the existence of any state of facts that:
(a) would make any of its representations and warranties in this
Agreement untrue in any material respect; or
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(b) would otherwise constitute a material adverse change in the
business, results of operation, working capital, assets, liabilities or
condition (financial or otherwise) of OSI, Outback or SI and their respective
subsidiaries, taken as a whole. No supplement or amendment to any Disclosure
Schedule shall have any effect for the purpose of determining the satisfaction
of or compliance with the conditions to the obligations of the parties to
consummate the Merger set forth elsewhere in this Agreement.
5.2 Cooperation. Until the Effective Date, each of the parties hereto
shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date and, in
any event, before the Closing Date, the approvals, authorizations and consents
necessary to consummate the transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other parties may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its control, all
conditions precedent to the obligations to close this Agreement.
5.3 Post-Closing Adjustment. As soon as practicable after the Effective
Date, but in no event more than forty-five (45) days thereafter, OSI shall
determine and report in writing to all parties hereto:
(a) the amount of current assets of SI as of the Effective Date;
(b) the amount of all liabilities of SI (other than liabilities
specified in Item 11.1 of the SI Disclosure Schedule to the extent assumed by
Outback) which were not paid in full prior to the Effective Date;
(c) the estimated amount of all federal and state taxes, including, but
not limited to, federal and state income taxes, payable by SI for the short tax
year ending on the Effective Date;
Upon receipt of such report, Stone (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Stone (and at the expense of Stone)
shall meet and attempt to agree on the items to which objection was made. If
such persons cannot agree within thirty (30) days from the date of written
objection, the items on which agreement has not been reached shall be submitted
to the Tampa, Florida office of Price Waterhouse (or other agreed upon
independent "Big Six" accounting firm) for a resolution of such items and whose
decision shall be final and binding on all parties. The fees and expenses of
Price Waterhouse (or other accounting firm) shall be paid by the non-prevailing
party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Stone within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Stone shall pay such
excess to OSI within ten (10) days of the final determination.
5.4 Distribution and Allocations. The parties acknowledge and agree
that notwithstanding the effective date of the Merger, Outback shall be entitled
to SI's entire share of Partnership distributions of cash flow, and shall be
allocated SI's shares of profit and loss, from and after October 1, 1997.
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5.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take or cause to be
taken, all actions and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the appropriate vote of the
shareholders of SI.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of OSI and Outback and Stone shall take all such
necessary action.
(c) Neither Outback, OSI, SI nor Stone shall take any action which
would jeopardize the characterization of the Merger as a reorganization within
the meaning of Section 368(a) of the Code or the treatment of the Merger for
financial reporting purposes as a pooling of interests.
ARTICLE 6
COVENANTS OF SI AND STONE
SI and Stone covenant and agree with OSI as follows:
6.1 Securities Law Compliance. Stone represents and warrants, and
covenants to Outback and OSI that:
(a) Stone has received all schedules and exhibits and the documents
furnished to SI pursuant to SECTION 4.8;
(b) Stone has had the opportunity to ask questions of and receive
answers from representatives of the management of OSI concerning the terms and
conditions of the transactions contemplated hereby and to obtain all additional
information that OSI possesses or could acquire without unreasonable expense
that is necessary to verify the accuracy of information furnished to Stone.
(c) OSI and Outback have furnished him with all information requested
and full access to materials concerning OSI and Outback which the Stone and/or
his advisors deemed necessary to properly evaluate the Merger. Such information
and access have been made available and utilized to the extent Stone considers
necessary and advisable in making an informed investment decision, and Stone has
consulted his own tax advisor and understands the evaluation of such materials
may require the assistance of experts and Stone has utilized such experts to the
extent deemed necessary.
(d) Stone understands that the OSI Common Stock to be received is an
investment of a speculative nature and Stone must bear the risks thereof for an
indefinite period of time. Stone has adequate means for providing for his needs,
is able to bear the economic risk of the investment and has no need for
liquidity in the OSI Common Stock to be received in the Merger.
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(e) Stone and/or his representatives or advisors who have acted with or
on behalf of Stone and who have advised Stone in this matter have such knowledge
and experience in financial and business matters that Stone is capable of
evaluating the merits and risks of the Merger for OSI Common Stock.
(f) Stone is participating in the Merger solely for his account as a
private investment, and Stone has no present agreement, understanding,
arrangement or intention to sell or transfer all or any portion of the shares of
OSI Common Stock to be issued in the Merger to any other person or persons.
Stone does not presently intend to enter into any such agreement or undertaking
and there are no present circumstances which will compel Stone to sell any OSI
otherwise transfer the shares (except for de minimis gifts of shares) unless
they are registered under the Securities Act and applicable state securities
laws or, in the opinion of OSI and its counsel, an exemption from registration
is available therefor.
(g) The investment by Stone in OSI Common Stock pursuant to the Merger
is a suitable investment for Stone given the investment goals and objectives of
Stone.
(h) Stone agrees to indemnify and hold OSI and Outback and each of
their respective officers, directors and advisors harmless against all liability
arising out of or in connection with any purchase, resale or distribution by
Stone of any OSI Common Stock received hereby which is effected other than in
strict compliance with the terms hereof and applicable law.
(i) Stone understands that the shares of OSI Common Stock to be issued
in the Merger will not be registered under the Securities Act, nor any state
securities laws, and such OSI Common Stock may not be sold or transferred except
in compliance with such laws. Stone agrees to comply with the restrictions on
transfer contained in Section 6.2 hereof.
(j) Stone understands that OSI will place an appropriate legend on the
certificate representing OSI Common Stock to be received restricting the
transfer of the shares and stop-transfer instructions will be given to the
transfer agent for the OSI Common Stock with respect to such certificates.
(k) Stone is a natural person (i) whose net worth (the excess of total
assets over total liabilities), individually or jointly with his spouse, exceeds
$1,000,000 (inclusive of the value of home, home furnishings and automobiles);
or (ii) who had an Individual Annual Adjusted Gross Income in excess of $200,000
in each of the two most recent tax years or joint income with Stone's spouse in
excess of $300,000 in each of those years and reasonably expects to reach the
same income level in the current tax year.
6.2 Restriction on Transfer.
(a) Stone covenants and agrees not to sell, convey, pledge, grant a
security interest in, assign or otherwise transfer or encumber any of the OSI
Common Stock to be issued in the Merger except in accordance with the following
provisions:
(i) Stone may transfer twenty percent (20%) of the OSI Common
Stock received in the Merger at any time after October 1, 1998;
(ii) Stone may transfer an additional twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after October 1, 1999;
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(iii) Stone may transfer an additional twenty percent (20%) of
the OSI Common Stock received into the Merger at any time after October 1, 2000;
(iv) Stone may transfer an additional twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after October 1, 2001;
(v) Stone may transfer the remaining twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after October 1, 2002.
(b) Notwithstanding the provisions of (a) above, Stone may make bona
fide gifts of OSI Common Stock to immediate family members or trusts of which
immediate family members are the exclusive beneficiaries provided, however, the
donees of such gifts shall take such OSI Common Stock subject to the
restrictions contained in (a) above. For purposes of determining Stone's
compliance with (i) through (v) above, any transfers by donees shall be
aggregated with, and shall be considered as, transfers by Stone for purposes of
calculating compliance with (i) through (v) of subsection (a).
(c) OSI's transfer agent shall maintain stop transfer instructions on
the OSI Common Stock issued in the Merger and the certificates representing such
shares shall bear an appropriate legend evidencing the restrictions contained in
(a) above.
6.3 Payment of Liabilities. SI and Stone covenant and agree that all
debts and liabilities of SI relating to periods prior to the Closing Date shall
be paid or satisfied in full prior to the Effective Date, except only current
liabilities and those debts and liabilities of SI specified in Item 11.1 of the
Disclosure Schedules.
6.4 Pooling. Stone agrees that until such time as financial results of
OSI covering at least thirty (30) days of combined operations of OSI and SI
subsequent to the Effective Date have been published, he will not sell or
otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with SI and
Stone as follows:
7.1 Employment Agreements. Solely with respect to the Merger, and any
consequential termination of any partnership by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between the Partnership, as
employer, and the general managers of the Partnership's Outback Steakhouse(R)
restaurants, as employees. Outback shall succeed to all rights and obligations
of the Partnership under such Employment Agreements. Nothing contained herein
shall be construed as in any way limiting Outback's right to terminate any such
Employment Agreement as a result
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of any circumstance or event other than the Merger and consequential termination
of the Partnership by operation of law.
7.2 Assumed Liabilities. OSI and Outback agree to assume and pay the
liabilities specified in Item 11.1 (subject to the amount limits specified in
Item 11.1 of the Disclosure Schedules) and to indemnify and hold harmless Stone
from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of SI, Stone, OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 Consents to Transaction. SI, Outback and OSI shall have received
all consents or approvals and made all applications, requests, notices and
filings with, any person, governmental authority or governmental agency required
to be obtained or made in connection with the consummation of the transactions
contemplated by this Agreement. There shall have been obtained from all state
and local governments and governmental agencies all approvals and consents
necessary to enable SI and/or the Partnership, as applicable, to transfer their
liquor licenses and permits to Outback, to enable Outback to assume such
licenses and permits or to enable Outback to operate restaurants (of the kind
and quality customarily operated by Outback) using such permits or licenses.
Copies of all consents and approvals received by any party pursuant to this
SECTION 8.1 shall be furnished to the other party.
8.2 Absence of Litigation. No governmental agency or authority shall
have instituted or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and no order, judgment or decree by
any court or governmental agency or authority shall be in effect that enjoins,
restrains or prohibits the same or otherwise would materially interfere with the
operation of the assets and business of SI or the Partnership or OSI and its
subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
8.3 Dissenter's Rights. The number of shares of capital stock of SI for
which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.12 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SI
The obligations of SI and Stone to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
9.1 Compliance. OSI and Outback shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
OSI and Outback on or before the Closing Date.
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9.2 Representations and Warranties. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to SI and Stone pursuant hereto
or in connection with the transactions contemplated hereby, shall have been true
and correct in all material respects as of the date hereof and shall be true and
correct in all material respects at the Closing Date with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
9.3 Material Adverse Changes. Since the date hereof, there shall have
occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of OSI
and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 Compliance. SI and Stone shall have or shall have caused to be
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
any of them on or before the Closing Date.
10.2 Representations and Warranties. All of the representations and
warranties made by SI and/or Stone in this Agreement, the Disclosure Schedule,
and in all certificates and other documents delivered by SI or Stone pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
10.3 Current Financial Status. OSI shall have received the unaudited
financial statements of SI as of August 31, 1997, for the period then ended.
10.4 Material Adverse Changes. Since December 31, 1996, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of SI
or the Partnership.
10.5 Pooling. OSI shall have received a letter from Deloitte & Touche,
in form and substance satisfactory to OSI and dated not more than five days
prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
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ARTICLE 11
INDEMNIFICATION
Stone, on the one hand, and OSI and Outback, jointly and severally, on
the other hand, agree as follows:
11.1 Indemnification Based on Agreement. Subject to the limitations
contained in SECTION 11.2 hereof, Stone shall indemnify and hold harmless OSI,
Outback and SI, and OSI, Outback and SI, jointly and severally, shall indemnify
and hold harmless Stone, against any losses, claims, damages or liabilities to
which such indemnified party may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any facts or circumstances that would constitute a breach by the other of
any representation, warranty or covenant contained herein or in any agreement
executed pursuant hereto and will reimburse any legal or other expenses
reasonably incurred by any indemnified party in connection with investigating or
defending any such loss, claim, damage, liability or action.
In addition to the above, Stone shall indemnify OSI, Outback and SI, as
provided in the first paragraph of this SECTION 11.1, against any loss, claim,
damage or liability arising out of (i) any tax liability of SI for any period
prior to and including October 1, 1997 and (ii) any debt of SI (other than the
debts specified in Item 11.1 of the Disclosure Schedule to the extent assumed by
Outback), and (iii) all claims, obligations, causes of action and liabilities,
of whatever kind or character, of any of SI which arise out of or are based upon
events first occurring on or before the Effective Date, except only the
liabilities assumed by Outback as specified in Item 11.1 of the Disclosure
Schedule.
11.2 Limitation. Stone shall have no obligation under SECTION 11.1 to
indemnify OSI, Outback or SI for any liability, loss, claim or damage arising
out of or based upon facts or actions first occurring after the Effective Date.
All obligations of indemnity (other than those relating to tax obligations of SI
under SECTION 11.1 above which shall continue for the period specified in
SECTION 12.4(B) hereof) shall terminate two (2) years from the Closing Date;
provided, however, the obligations of indemnity shall not terminate with respect
to any matter for which indemnification is claimed within two (2) years from the
Closing Date.
11.3 Cooperation. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 Notice. An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of service
or summons to appear in any action begun in respect of which indemnity may be
sought hereunder. Failure to so notify the indemnifying party or parties shall
cause the indemnified party to be liable for any damage caused by failure to
give timely notice. The indemnifying party or parties may participate at their
own expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after receipt of
such notice, they may assume the defense of such action with counsel chosen by
the indemnifying party or parties and approved by the indemnified party in such
action, unless the indemnified party reasonably objects to such assumption on
the ground that its counsel has advised it that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party shall have
the right to employ counsel approved by the indemnifying party or parties. If
the indemnifying party or parties assume the defense of such action, the
indemnifying party or parties shall not be liable for fees and expenses of
counsel for the indemnified party incurred thereafter in connection with such
action. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel for the indemnified parties in
connection with any one
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action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances unless, in the
reasonable opinion of such counsel, there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of SI:
(a) by mutual consent of SI and OSI;
(b) by OSI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of SI or Stone set forth herein
or if there has been any material failure on the part of SI or Stone to comply
with their obligations hereunder;
(c) by SI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of OSI or Outback set forth
herein or if there has been any material failure on the part of OSI or Outback
to comply with its obligations hereunder;
(d) by either OSI, SI or Stone, if the transactions contemplated by
this Agreement have not been consummated by October 31, 1997, unless such
failure of consummation is due to the failure of the terminating party to
perform or observe the covenants, agreements and conditions hereof to be
performed or observed by it at or before the Closing Date;
(e) by either OSI, or SI if the conditions precedent to its obligations
to close this Agreement have not been satisfied or waived by it at or before the
Closing Date; and
(f) by either SI or OSI if the transactions contemplated hereby violate
any nonappealable final order, decree or judgment of any court or governmental
body or agency having competent jurisdiction.
12.2 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
12.3 Entire Agreement. This Agreement and the exhibits and Disclosure
Schedule hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 Survival of Representations and Warranties.
(a) The representations, warranties and indemnification obligations of
OSI and Outback contained herein or in any exhibit, certificate, document or
instrument delivered pursuant to this Agreement
18
<PAGE> 24
shall survive the Closing for a period of two years; provided, however, that the
obligations of OSI and Outback under ARTICLE 7 and ARTICLE 11 hereof shall
survive for the periods provided therein.
(b) Except where otherwise specifically provided in this Agreement, the
representations, warranties and indemnification obligations of Stone contained
herein or in any exhibit, schedule, certificate, document or instrument
delivered pursuant to this Agreement shall survive the Closing for a period of
three years from the Effective Date; provided, however, the representations and
warranties contained in SECTION 2.7 shall survive the Closing for a period
ending four years after the filing of SI's federal income tax return for the
period including the Effective Date.
12.5 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 Notices. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
If to SI or Stone: STONE, INC.
10207 East Hunter Valley Road
Vienna, Virginia 22181
Attention: Benjamin J. Stone,III
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow
General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 Successors and Assigns. This Agreement and the rights, interests
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 Waiver and Other Action. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
19
<PAGE> 25
12.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 Headings. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 Construction. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 Jurisdiction and Venue. The parties agree that any action brought
by either party against the other in any court, whether federal or state, shall
be brought within the State of Florida in the judicial circuit in which OSI has
its principal place of business. Each party hereby agrees to submit to the
personal jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
12.14 Enforcement. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 Further Assurances. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
12.16 Equitable Remedies. The parties hereto acknowledge that a refusal
by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
20
<PAGE> 26
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
"SI"
Attest: STONE, INC.
a Virginia corporation
By: By:
----------------------------- -------------------------------
Title: Secretary BENJAMIN J. STONE, III
Title: President
Witness: "Stone"
-----------------------------------
BENJAMIN J. STONE, III
21
<PAGE> 27
EXHIBIT A
ARTICLES OF MERGER
THIS AGREEMENT, PLAN AND ARTICLES OF MERGER ("Articles of Merger"),
dated as of October 1, 1997, is entered into by and among STONE, INC., a
Virginia corporation ("SI"); OUTBACK STEAKHOUSE, INC., a Delaware corporation
("OSI"); and OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida corporation
("Outback").
W I T N E S S E T H:
WHEREAS, SI is a corporation duly organized and validly existing under
the laws of the State of Virginia, and the authorized and outstanding capital
stock of SI is as follows:
<TABLE>
<CAPTION>
Authorized Shares Issued
SI Capital Stock and Outstanding
-- ------------- ---------------
<S> <C> <C>
STONE, INC. 10,000 Common Shares 500 Common Shares
</TABLE>
WHEREAS, OSI is a corporation duly organized and validly existing under
the laws of the State of Delaware; and
WHEREAS, OSI is authorized to issue 2,000,000 shares of Preferred
Stock, par value $.01, none of which are outstanding and 200,000,000 shares of
Common Stock, $.01 par value (the "OSI Common Stock"), of which approximately
48,030,588 shares of OSI Common Stock are issued and outstanding as of March 7,
1997; and
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, the respective Boards of Directors of each of SI, Outback, and
OSI deem it advisable, for the benefit of their respective corporations and
shareholders, that SI be merged into Outback, with Outback as the surviving
corporation (in its capacity as surviving corporation, Outback is hereinafter
sometimes referred to as the "Surviving Corporation"), pursuant to the
provisions of Sections 607.1101- 607.1107 of the Florida Business Corporation
Act (the "Florida Act") and the laws of the State of Virginia ("Virginia Law"),
and have approved these Articles of Merger; and
WHEREAS, the Board of Directors of SI has directed that these Articles
of Merger be submitted to its voting shareholder for approval and adoption and
the voting shareholder of SI has approved and adopted these Articles of Merger
in accordance with Virginia Law and the corporate governance documents of SI by
unanimous written consent dated September , 1997; and
WHEREAS, OSI as the sole shareholder of Outback has approved and
adopted these Articles of Merger by written consent on September 30, 1997; and
WHEREAS, the Agreement and Plan of Reorganization (the "Reorganization
Agreement"), which Outback, OSI, and SI have entered, contemplates the execution
and delivery of these Articles of Merger.
A-1
<PAGE> 28
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for the purpose of prescribing the terms and
conditions of the merger and such other details and provisions as are deemed
necessary or desirable, the parties hereto agree as follows:
MERGER. The names of the corporations which propose to merge are STONE,
INC., a Virginia corporation ("SI"), and OUTBACK STEAKHOUSE OF FLORIDA, INC.
("Outback"). In accordance with the provisions of the Florida Act and Virginia
Law at the Effective Date (as hereinafter defined), SI shall be merged into
Outback, and Outback shall be the Surviving Corporation and as such shall
continue to be governed by the laws of the State of Florida. The plan of merger
set forth in these Articles of Merger was duly authorized by each of Outback and
SI, respectively, by all action required by the laws under which it was
incorporated or organized and by its constituent documents.
1. CONTINUATION OF CORPORATE EXISTENCE. The corporate existence and
identity of Outback, with all its purposes, powers, franchises, privileges,
rights and immunities, shall continue unaffected and unimpaired by the merger
and the corporate existence and identity of SI with all its purposes, powers,
franchises, privileges, rights and immunities at the Effective Date shall be
merged with and into that of Outback, and Outback as the Surviving Corporation
shall be vested fully therewith, and the separate corporate existence and
identity of SI shall thereafter cease except to the extent continued by statute.
2. EFFECTIVE DATE. The merger shall become effective (hereinbefore and
hereinafter called the "Effective Date") upon the later of (i) filing of these
Articles of Merger with the Secretary of State of the State of Florida and the
Secretary of State of the State of Virginia; or (ii) October 1, 1997. Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Virginia pursuant to the Florida Act and Virginia Law.
3. CORPORATE GOVERNMENT.
(a) The Certificate of Incorporation of Outback, as in effect
on the Effective Date, shall continue in full force and effect and
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Outback, as in effect as of the Effective
Date, shall continue in full force and effect and shall be the Bylaws
of the Surviving Corporation.
(c) The members of the Board of Directors and the officers of
the Surviving Corporation shall be the persons holding such positions
for Outback as of the Effective Date.
4. CONVERSION OF SHARES. The manner and basis of converting the capital
stock of SI into OSI Common Stock, subject to SECTION 5(C) below with respect to
fractional shares, shall be as follows:
(a) Each share of SI common stock which shall be outstanding
immediately prior to the Effective Date shall at the Effective Date, by
virtue of the merger and without any action on the part of the holder
thereof, be converted into and exchanged for 285.584 shares of OSI
Common Stock.
(b) The Outback Capital Stock outstanding immediately prior to
the Effective Date shall be unaffected by the merger.
A-2
<PAGE> 29
(c) The stock transfer books of SI shall be closed as of the
close of business on the Effective Date and no transfer of record of
any of its capital stock shall take place thereafter.
(d) No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead one whole share
of OSI Common Stock shall be issued to each holder of shares of common
stock of the merging corporations whose fractional share interest is .5
or more of one whole share; each fraction of less than .5 of one whole
share shall be disregarded.
(e) Notwithstanding the foregoing, the OSI shall not be
required to issue or distribute more than 142,792 shares of OSI Common
Stock pursuant to the merger, less any shares reserved for dissenters'
rights, as described in Article 1 of the Reorganization Agreement.
(f) All of the shares of OSI Common Stock, when delivered
pursuant to the provisions of these Articles of Merger, shall be
validly issued, fully paid and nonassessable.
(g) At the Effective Date, each holder of certificates
representing shares of the common stock of SI shall thereupon cease to
have any rights with respect to such shares and shall be deemed to be a
shareholder of OSI to the extent of the number of shares of OSI Common
Stock to which such shareholder shall be entitled in accordance with
these Articles of Merger; and shall surrender certificates representing
shares of the common stock of SI to the OSI, whereupon such holder
shall receive a certificate or certificates for the number of shares of
OSI Common Stock to which such holder is entitled hereunder.
5. RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under the laws of the
State of Florida.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of Outback, and SI and all property, real, personal and mixed
and all debts due on whatever account, including subscription to shares
and all other chooses in action and every other interest of or
belonging or due to SI shall be taken and deemed to be transferred or
invested in the Surviving Corporation without further act or deed.
(c) At the Effective Date, the Surviving Corporation shall
thenceforth be responsible and liable for all liabilities and
obligations of SI and any claim existing or action or proceeding
pending by or against SI or Outback may be prosecuted as if the merger
had not occurred or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the property
of SI or Outback shall be impaired by the merger.
6. CONSENT OF SHAREHOLDERS. These Articles of Merger has been adopted
by the shareholders of SI in accordance with Virginia Law and its corporate
governance documents by unanimous written consent effective as of , 1997.
These Articles of Merger has been adopted by the written consent of the sole
shareholder of Outback dated September 30, 1997 pursuant to the Florida Act.
A-3
<PAGE> 30
7. DISSENTING SHAREHOLDERS. If any shareholder of SI files a written
objection to these Articles of Merger before a vote of the shareholders is taken
hereon and complies with the further provisions of the Florida Act or Virginia
Law, as applicable, he may be paid the fair value of his shares. If any
shareholder of SI lawfully elects, pursuant to the Florida Act or Virginia Law,
as applicable, to exercise or pursue his right to dissent from any of the
corporate actions referred to in these Articles of Merger with respect to the
shares of common stock of SI owned by such shareholder (the "Dissenting
Shares"), such shareholder shall be entitled to exercise only those rights
available to him as set forth in the Florida Act or Virginia Law, as applicable,
and, in that event, only in the manner set forth therein. During the period in
which any such shareholder shall be exercising or pursuing any of such
shareholder's rights of dissent as specified in the Florida Act or Virginia Law,
as applicable, such shareholder shall have no other rights pursuant to or
arising from these Articles of Merger.
8. REORGANIZATION AGREEMENT. These Articles of Merger is intended to
supplement the Reorganization Agreement and is not intended to conflict with or
supersede that agreement and, in the event of any conflict, the provisions of
the Reorganization Agreement shall control.
9. COPIES. A copy of these Articles of Merger shall be on file at the
principal place of business of the Surviving Corporation located at 550 North
Reo Street, Suite 200, Tampa, Florida 33609. A copy of these Articles of Merger
will be furnished by the Surviving Corporation, on request and without cost, to
any shareholder of any corporation that is a party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement, Plan
and Articles of Merger as of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
A-4
<PAGE> 31
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came ROBERT D.
BASHAM and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE, INC., a Delaware corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- -------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of October, 1997, before me, personally came PAUL E.
AVERY and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE OF FLORIDA, INC., a Florida corporation, who are personally known to
me, and each being first duly sworn, did depose and say that they executed the
foregoing on behalf of said corporation by order of the Board of Directors of
said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
A-5
<PAGE> 32
"SI"
Attest: STONE, INC.
a Virginia corporation
By: By:
----------------------------- -------------------------------
Title: Secretary BENJAMIN J. STONE, III
Title: President
STATE OF VIRGINIA )
) ss
COUNTY OF )
On this ______ day of October, 1997, before me, personally came BENJAMIN J.
STONE, III and ___________________________, President and Secretary,
respectively, of STONE, INC., a Virginia corporation, who are personally known
to me, and each being first duly sworn, did depose and say that they executed
the foregoing on behalf of said corporation by order of the Board of Directors
of said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
A-6
<PAGE> 33
EXHIBIT B
DISCLOSURE SCHEDULES
Item 2.7 Any asset acquired or disposed of, or indebtedness incurred,
assumed, guaranteed, endorsed, paid or discharged; any material
amount of assets subjected or permitted to be subjected to any
liability or obligation or to any lien, claim or encumbrance of
any kind, except in the ordinary course of business or pursuant
to agreements in force at the date of this Agreement and
identified below:
None.
Item 2.9(a) Material liabilities or obligations, contingent or otherwise of
the Partnership of any nature:
None.
Item 2.9(b) Liabilities or obligations of SI (other than material
liabilities arising solely by reason of SI's status as a partner
in the Partnership) of any nature, whether absolute, accrued,
contingent or otherwise:
None.
Item 2.10 Liens and encumbrances on real and personal property purchased
by SI or the Partnership since the date of the Balance Sheet,
except for liens for taxes, assessments or other governmental
charges not yet due and payable.
None.
Item 2.11 Contracts and commitments not in the ordinary course of the
Partnership's business.
None.
Item 2.12 Pending suits, claims, actions or litigation or administrative,
arbitration or other proceedings or governmental investigations
or inquiries against SI or the Partnership to which any of their
business or assets is subject.
None.
B-1
<PAGE> 34
Item 2.13 Violations and defaults of SI and the Partnership.
None.
Item 11.1 Current liabilities and those debts and liabilities of SI agreed
to be assumed by Outback:
None.
08/07/97
B-2
<PAGE> 1
EXHIBIT 4.25
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
HOOD & ASSOCIATES, INC.
AND
DENNIS L. HOOD
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 - PLAN OF ACQUISITION...................................................................................1
1.1 The Merger......................................................................................1
1.2 Adjustments.....................................................................................2
1.3 Closing.........................................................................................2
1.4 Execution and Delivery of Closing Documents.....................................................2
1.5 Execution and Filing of Merger Documents........................................................2
1.6 Effectiveness of Merger.........................................................................3
1.7 Further Assurances..............................................................................3
1.8 Certificates....................................................................................3
1.9 Closing of Transfer Books.......................................................................3
1.10 Fractional Shares...............................................................................3
1.11 Accounting Treatment............................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF HAI AND HOOD........................................................3
2.1 Organization and Good Standing..................................................................3
2.2 Power and Authority.............................................................................3
2.3 Foreign Corporation.............................................................................4
2.4 Authority and Validity..........................................................................4
2.5 Binding Effect..................................................................................4
2.6 Compliance with Other Instruments...............................................................4
2.7 Capitalization of HAI...........................................................................4
2.8 Absence of Certain Changes......................................................................5
2.9 Tax Liabilities.................................................................................5
2.10 No Undisclosed Liabilities......................................................................6
2.11 Title to Properties.............................................................................6
2.12 Contracts.......................................................................................6
2.13 Litigation and Government Claims................................................................6
2.14 No Violation of Any Instrument..................................................................7
2.15 Necessary Approvals and Consents................................................................7
2.16 Compliance With Laws............................................................................7
2.17 Accuracy of Information Furnished...............................................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF HOOD................................................................7
3.1 Authority and Validity..........................................................................8
3.2 Binding Effect..................................................................................8
3.3 Ownership.......................................................................................8
3.4 Voting..........................................................................................8
3.5 Residency.......................................................................................8
3.6 Compliance with Other Instruments...............................................................8
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK.....................................................8
4.1 Organization and Good Standing..................................................................8
4.2 Foreign Qualification...........................................................................8
4.3 Power and Authority.............................................................................8
4.4 Authority and Validity..........................................................................9
4.5 Binding Effect..................................................................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.6 Compliance with Other Instruments...............................................................9
4.7 Capitalization of OSI...........................................................................9
4.8 SEC Reports.....................................................................................9
4.9 Litigation and Government Claims...............................................................10
4.10 No Violation of Any Instrument.................................................................10
4.11 Necessary Approvals and Consents...............................................................10
4.12 Absence of Certain Changes or Events...........................................................10
ARTICLE 5 - JOINT COVENANTS OF HAI, HOOD, OSI AND OUTBACK........................................................10
5.1 Notice of any Material Change..................................................................11
5.2 Cooperation....................................................................................11
5.3 Post-Closing Adjustment........................................................................11
5.4 Distribution and Allocations...................................................................12
5.5 Additional Agreements..........................................................................12
ARTICLE 6 - COVENANTS OF HAI AND HOOD............................................................................12
6.1 Securities Law Compliance. ....................................................................12
6.2 Restriction on Transfer. ......................................................................14
6.3 Payment of Liabilities.........................................................................14
6.4 Pooling........................................................................................14
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK.........................................................................15
7.1 Mandatory Registration of OSI Common Stock.....................................................15
7.2 Registration Procedures........................................................................16
7.3 Expenses of Registration.......................................................................16
7.4 Adjustments in Number of Shares................................................................16
7.5 Transferees....................................................................................16
7.6 Employment Agreements..........................................................................16
7.7 Assumed Liabilities............................................................................17
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS....................................................17
8.1 Consents to Transaction........................................................................17
8.2 Absence of Litigation..........................................................................17
8.3 Dissenter's Rights.............................................................................17
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF HAI...........................................................17
9.1 Compliance.....................................................................................17
9.2 Representations and Warranties.................................................................17
9.3 Material Adverse Changes.......................................................................18
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK..............................................18
10.1 Compliance.....................................................................................18
10.2 Representations and Warranties.................................................................18
10.3 Current Financial Status.......................................................................18
10.4 Material Adverse Changes.......................................................................18
10.5 Pooling........................................................................................18
ARTICLE 11 - INDEMNIFICATION.....................................................................................19
11.1 Indemnification Based on Agreement. .........................................................19
11.2 Limitation.....................................................................................19
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
11.3 Cooperation....................................................................................19
11.4 Notice.........................................................................................19
ARTICLE 12 - MISCELLANEOUS.......................................................................................20
12.1 Termination....................................................................................20
12.2 Expenses.......................................................................................20
12.3 Entire Agreement...............................................................................20
12.4 Survival of Representations and Warranties.....................................................20
12.5 Counterparts...................................................................................21
12.6 Notices........................................................................................21
12.7 Successors and Assigns.........................................................................21
12.8 Governing Law..................................................................................21
12.9 Waiver and Other Action........................................................................21
12.10 Severability...................................................................................21
12.11 Headings.......................................................................................22
12.12 Construction...................................................................................22
12.13 Jurisdiction and Venue.........................................................................22
12.14 Enforcement....................................................................................22
12.15 Further Assurances.............................................................................22
12.16 Equitable Remedies.............................................................................22
EXHIBIT A
ARTICLES OF MERGER.....................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...................................................................................B-1
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of the 1st day of November, 1997, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), HOOD & ASSOCIATES, INC., a Florida
corporation ("HAI") and DENNIS L. HOOD, an individual residing in the State of
North Carolina ("Hood").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Hood is the sole owner of the issued and outstanding common
stock of HAI, and Hood is the sole director, President and is responsible for
the day-to-day operations of HAI; and
WHEREAS, Outback and HAI have entered into that certain Florida limited
partnership known as Outback/Charlotte-I, Limited Partnership dated January 1,
1996 ("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
States of North Carolina and South Carolina; and
WHEREAS, the Board of Directors of HAI has approved the merger of HAI
into Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, HAI will be merged with and into
Outback and all of the outstanding shares of capital stock of HAI will be
converted into shares of Common Stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 The Merger. Subject to and upon the terms and conditions contained
herein, HAI shall be merged with and into Outback, with Outback being the
surviving corporation, in accordance with the Articles of Merger substantially
in the form attached to this Agreement as EXHIBIT A (the "Merger Agreement"),
which will be executed and delivered by OSI, Outback, and HAI prior to the
Merger. As a result of the Merger, each voting and nonvoting common share of HAI
outstanding immediately before the Effective Date (as herein defined) shall, by
virtue of the Merger and without any further action being
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required by the holders thereof, be converted into and exchanged for 231.725
shares of OSI Common Stock.
1.2 Adjustments.
(a) Except as otherwise provided in this SECTION 1.2, the total number
of shares of OSI Common Stock to be issued pursuant to the Merger shall be Two
Hundred Thirty-One Thousand Seven Hundred Twenty-Five (231,725).
(b) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, (i) the outstanding shares of capital stock
of HAI shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, or readjustment, with a record date within such
period, or a stock dividend thereon shall be declared with a record date within
such period or (ii) HAI shall have issued additional shares of its capital
stock, the number of shares of OSI Common Stock received in exchange for each
share of HAI's capital stock shall be adjusted so that the aggregate number of
shares of OSI Common Stock received in exchange for all shares of HAI's capital
stock (assuming no Dissenting Shares) remains at 231,725.
(c) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, the outstanding shares of OSI Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such period,
the number of shares of OSI Common Stock received in exchange for each share of
capital stock of HAI (as specified in SECTION 1.1 hereof) shall be adjusted to
accurately reflect such change.
1.3 Closing. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on November 1, 1997, or on such date and
at such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than November
30, 1997, unless further extended by agreement of the parties to this Agreement.
The parties shall use their best efforts to effectuate a timely closing as
provided in this SECTION 1.3.
1.4 Execution and Delivery of Closing Documents. Before the Closing,
each party shall cause to be prepared and at the Closing the parties shall
execute and deliver each agreement and instrument required by this Agreement or
the Merger Agreement to be so executed and delivered and not theretofore
accomplished. At the Closing, each party also shall execute and deliver such
other appropriate and customary documents as the other parties reasonably may
request for the purpose of consummating the transactions contemplated by this
Agreement and the Merger Agreement. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
1.5 Execution and Filing of Merger Documents. At the time of completion
of the Closing, OSI, Outback, HAI and Hood agree to take the following actions:
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(a) to execute and deliver all documents and certificates relating to
the Merger required to be executed by them that have not already been so
executed and that are required under applicable federal, state and local laws to
be filed in order validly to effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary of State
of the State of Florida and a Certificate of Merger to be issued by such
officer.
1.6 Effectiveness of Merger. The Merger shall become effective under
the laws of Florida upon the later of (i) filing of these Articles of Merger
with the Secretary of State of the State of Florida or (ii) November 1, 1997
(the "Effective Date"). Such Effective Date shall be indicated on Certificate of
Merger issued by the Secretary of State of the State of Florida pursuant to the
Florida Act.
1.7 Further Assurances. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional actions
as may reasonably be deemed necessary or advisable by any party in order to
consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of HAI as existed immediately before the Effective Date.
1.8 Certificates. As soon as practicable after the Effective Date, OSI
shall make available and each holder of capital stock of HAI shall be entitled
to receive upon surrender of stock certificates of HAI representing HAI capital
stock for cancellation, certificates representing the number of shares of OSI
Common Stock into which such shares are converted in the Merger as provided in
SECTION 1.1 hereof. The OSI Common Stock into which such HAI capital stock is
converted shall be deemed issued at the Effective Date.
1.9 Closing of Transfer Books. At the Closing Date, the stock transfer
books of HAI shall be closed and no transfer of capital stock of HAI, shall
thereafter be made.
1.10 Fractional Shares. No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead, one whole share of OSI
Common Stock shall be issued for each fractional share of .5 or more of one
whole share and each fractional share of less than .5 of one whole share shall
be disregarded.
1.11 Accounting Treatment. It is the intention of the parties hereto
that the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF HAI AND HOOD
Each of HAI and Hood, jointly and severally, represent and warrant to
OSI and Outback as follows:
2.1 Organization and Good Standing. HAI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
2.2 Power and Authority. HAI has the requisite power and authority and
all material licenses and permits required by governmental authorities to own,
lease and operate its properties and assets and to carry on its businesses as
currently being conducted.
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2.3 Foreign Corporation. HAI is duly qualified or licensed to do
business and in good standing as a foreign corporation in North Carolina and
South Carolina and in every other jurisdiction where the failure to so qualify
could have a material adverse effect on its respective business, operations,
assets or financial condition.
2.4 Authority and Validity.
(a) HAI has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Merger Agreement and the other
documents executed or to be executed by HAI in connection with this Agreement;
and the execution, delivery and performance by HAI of this Agreement, the Merger
Agreement and the other documents executed or to be executed by HAI in
connection with this Agreement have been duly authorized by all necessary
corporate action.
(b) Hood has the power and authority to execute, deliver and perform
his obligations under this Agreement and the other documents executed or to be
executed by Hood in connection with this Agreement.
2.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by HAI and Hood in connection with this
Agreement have been or will have been duly executed and delivered by HAI and
Hood, and are or will be, when executed and delivered, the legal, valid and
binding obligations of each of HAI and Hood enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
2.6 Compliance with Other Instruments. Neither the execution and
delivery by HAI nor Hood of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of HAI or
Hood pursuant to, its articles of incorporation, bylaws, or any note, bond,
indenture, mortgage, deed of trust, evidence of indebtedness, loan or lease
agreement, other agreement or instrument (including with customers), judgment,
order, injunction or decree by which HAI or Hood is bound, to which any of them
is a party, or to which any assets of any of them are subject; provided,
however, this SECTION 2.5 shall not apply with respect to any of the foregoing
if HAI is bound thereby, a party thereto, or its assets subject, solely by
reason of its status as a partner in the Partnership.
2.7 Capitalization of HAI.
(a) The authorized capital stock of HAI consists of Ten Thousand
(10,000) common shares. There are One Thousand (1,000) common shares issued and
outstanding, all of which are owned by Hood. There are no other shareholders of
HAI and no other persons with rights or options to acquire capital stock of HAI.
All of the issued and outstanding shares of capital stock of HAI have been duly
authorized and validly issued and are fully paid and non-assessable. There are
no shares of capital stock of HAI held in its treasury.
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(b) There are no voting trusts, shareholder agreements or other voting
arrangements among the shareholders of HAI.
(c) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating HAI to
issue, sell, exchange or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of HAI.
2.8 Absence of Certain Changes. From December 31, 1996 to the Closing
Date, (except solely as a result of HAI's status as a partner in the
Partnership) HAI has not:
(a) suffered any material adverse change in its business, results of
operations, working capital, assets, liabilities, or condition (financial or
otherwise) or the manner of conducting its business;
(b) suffered any material damage or destruction to or loss of its
assets not covered by insurance, or any loss of suppliers or employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material amount of
assets to any lien, claim or encumbrance of any kind, except in the ordinary
course of business or pursuant to agreements in force at the date of this
Agreement and identified in Item 2.7 of the Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or permitted to
lapse any material rights or claims;
(e) entered into or terminated any lease, agreement, commitment or
transaction, or agreed to or made any changes in any leases or agreements, other
than transactions and commitments entered into in the ordinary course of
business;
(f) written up, written down or written off the book value of any
assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or contributed
to any employee benefit plan;
(j) entered into any employment, consulting, compensation or collective
bargaining agreement with any person or group, except oral employment agreements
which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan or
severance agreements.
2.9 Tax Liabilities. HAI has filed all federal, state, county, local
and foreign tax returns and reports required to be filed by them by the date
hereof, including those with respect to income, payroll,
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property, withholding, social security, unemployment, franchise, excise and
sales taxes; HAI has either paid in full all taxes that have become due as
reflected on any return or report and any interest and penalties with respect
thereto or have fully accrued on their books or have established adequate
reserves for all taxes payable but not yet due; and have made cash deposits with
appropriate governmental authorities representing estimated payments of taxes,
including income taxes and employee withholding tax obligations. No extension or
waiver of any statute of limitations or time within which to file any return has
been granted to HAI with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
claimed, proposed or assessed against HAI nor has HAI received notice of any
such deficiency, delinquency or default. HAI has no reason to believe that HAI
has or may have any tax liabilities other than those reflected on the unaudited
balance sheet of HAI as of August 31, 1997, with any notes thereto, and the
related unaudited statements of income for the eight months ended August 31,
1997, together with supplemental information on HAI, each prepared and attested
to by the chief financial officer of HAI (the "Balance Sheets") and those
arising in the ordinary course of business since the date thereof. With regard
to the foregoing, HAI has relied on the accuracy and completeness of the
Schedule K-1 provided by the Partnership.
Hood shall have sole responsibility for filing all required tax returns
for HAI for all periods ending on or prior to the Effective Date. OSI shall
assist Hood in preparing income tax returns and shall cooperate with Hood to the
extent necessary therefor, and Hood shall provide OSI with copies of all such
returns at least fifteen (15) days prior to filing.
2.10 No Undisclosed Liabilities. There are no liabilities or
obligations of HAI (other than material liabilities arising solely by reason of
HAI's status as a partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise, other than liabilities or obligations
indicated in Item 2.9 of the Disclosure Schedules.
2.11 Title to Properties. HAI has good and marketable title to the
assets reflected in their books and records as being owned by them, (except as
they have since been affected by transactions in the ordinary course of business
and consistent with past practices) the real and personal properties reflected
in the Balance Sheets (except for assets subject to financing leases required to
be capitalized under generally accepted accounting principles, all of which are
so reflected in the Balance Sheet or notes thereto) and all assets purchased by
HAI since the date of the Balance Sheet, in each case free and clear of any
lien, claim or encumbrance, except as reflected in the Balance Sheet or notes
thereto and in Item 2.10 of the Disclosure Schedule and except for liens for
taxes, assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by HAI are properly reflected on the
applicable Balance Sheets and notes thereto.
2.12 Contracts. Excluding (i) contracts and commitments between Outback
or OSI and HAI or the Partnership, (ii) contracts and commitments entered into
by the Partnership to which Outback or OSI is a party, (iii) contracts and
commitments entered into by HAI in the ordinary course of the Partnership's
business without violation of the provisions of the Partnership Agreement, and
(iv) contracts and commitments entered into with the written consent of OSI or
Outback, Item 2.11 of the Disclosure Schedule is a complete and accurate list of
all of the contracts and commitments (including summaries of oral contracts) to
which HAI is a party or by which HAI is bound:
2.13 Litigation and Government Claims. Except as indicated in Item 2.12
of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against HAI or the Partnership or to which any of their
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business or assets is subject. Except as indicated in Item 2.12 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of HAI or Hood, contemplated or, to the best knowledge of HAI or Hood,
any basis for any unasserted claims (whether or not the potential claimant may
be aware of the claim) of any nature that might be asserted against HAI or the
Partnership.
2.14 No Violation of Any Instrument. Except as indicated in Item 2.13
of the Disclosure Schedule, HAI is not in violation of or default under nor has
any event occurred that, with the lapse of time or the giving of notice or both,
would constitute a violation of or default under or permit the termination or
the acceleration of maturity of or result in the imposition of a lien, claim or
encumbrance upon any property or asset of HAI pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of HAI or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by HAI in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
customers), judgment, order, injunction or decree to which HAI is a party, by
which HAI is bound or to which any of the assets of HAI are subject.
2.15 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida, North Carolina and
South Carolina with respect to effectuating the Merger, (b) consents required to
be obtained from applicable liquor control authorities, (c) consents required to
be obtained from lessors, and (d) under the provisions of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, or state
securities or blue sky laws, no authorization, consent, permit or license or
approval of or declaration, registration or filing with, any person or
governmental or regulatory authority or agency is necessary for the execution
and delivery by each of HAI and Hood of this Agreement, the Merger Agreement and
the other agreements executed or to be executed by them in connection with this
Agreement, and the consummation by HAI and Hood of the transactions contemplated
by this Agreement and the Merger Agreement, and the ownership and operation by
Outback of the respective businesses and properties of HAI after the Effective
Date in substantially the same manner as now operated.
2.16 Compliance With Laws. Hood has no actual knowledge that HAI or the
Partnership are not in compliance with any such laws applicable to their
respective business, where failure to so comply would have a material adverse
effect on their business, operations, properties, assets or conditions.
2.17 Accuracy of Information Furnished. No representation or warranty
by HAI or Hood in this Agreement nor any information in the Financial Statements
or in the Disclosure Schedule contains any untrue statement of a material fact
or omits to state any material fact that would make the statements herein or
therein, in light of the circumstances under which they were made, false or
misleading. Each of HAI and Hood have disclosed to OSI and Outback all facts
known to them that are material to HAI's and the Partnership's respective
businesses, operations, financial condition or prospects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HOOD
In addition to the representations and warranties contained in ARTICLE
2, Hood represents and warrants to OSI and Outback as follows:
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3.1 Authority and Validity. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents they are executing or will execute in connection herewith or
therewith.
3.2 Binding Effect. This Agreement and the other documents executed or
to be executed by Hood in connection with this Agreement have been or will have
been duly executed and delivered by him and are or will be, when executed and
delivered, his legal, valid and binding obligations enforceable in accordance
with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
3.3 Ownership. Hood is the sole record and beneficial shareholder of
HAI and no other person has any rights (in any form) to acquire any capital
stock of HAI.
3.4 Voting. He acknowledges that in his individual capacity as
shareholder and director of HAI, he has voted in favor of the execution and
delivery of this Agreement and the Merger Agreement.
3.5 Residency. Hood is, and has been at all times during the one year
ending on the date hereof, a resident of the State of North Carolina.
3.6 Compliance with Other Instruments. Neither the execution and
delivery by Hood of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Hood
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Hood is bound, to
which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to HAI and
Hood as follows:
4.1 Organization and Good Standing. OSI and Outback are corporations
duly organized, validly existing and in good standing under the laws of the
States of Delaware and Florida, respectively.
4.2 Foreign Qualification. Outback is duly qualified or licensed to do
business and in good standing as a foreign corporation in North Carolina and
South Carolina and in every other jurisdiction where the failure to so qualify
could have a material adverse effect on its respective business, operations,
assets or financial condition.
4.3 Power and Authority. OSI and Outback each have the corporate power
and authority and all licenses and permits required by governmental authorities
to own, lease and operate their respective properties and assets and to carry on
their respective business as currently being conducted.
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4.4 Authority and Validity. OSI and Outback each have the corporate
power and authority to execute, deliver and perform their respective obligations
under this Agreement, the Merger Agreement and the other documents executed or
to be executed by OSI and Outback in connection with this Agreement and the
execution, delivery and performance by OSI and Outback of this Agreement, the
Merger Agreement and the other documents executed or to be executed by OSI and
Outback in connection with this Agreement have been duly authorized by all
necessary corporate action.
4.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by OSI and Outback in connection with this
Agreement have been or will have been duly executed and delivered by OSI and
Outback and are or will be, when executed and delivered, the legal, valid and
binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
4.6 Compliance with Other Instruments. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 Capitalization of OSI. The authorized capital stock of OSI consists
of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par value and
Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of which
approximately 48,536,158 shares of Common Stock and no shares of Preferred Stock
were issued and outstanding as of October 9, 1997. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable. The shares of OSI Common Stock to
be issued in exchange for HAI's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
non-assessable. As of the date hereof, except for (i) employee and director
stock options to acquire shares of OSI Common Stock and (ii) employee stock
ownership plans, there are no options, warrants or other rights, agreements or
commitments outstanding obligating Outback or OSI to issue shares of its capital
stock. All of the outstanding shares of capital stock of Outback are owned by
OSI, free and clear of any lien or encumbrance.
4.8 SEC Reports. OSI has delivered to HAI and Hood true and complete
copies of its (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Proxy Statement used in connection with its 1997 Annual Meeting of
Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all periodic
reports, if any, on Form 8-K filed with the Securities and Exchange Commission
since December 31, 1996 to the date hereof; and (v) all Forms 10-Q, if any,
filed with the Securities and Exchange Commission since December 31, 1996, to
the date hereof. Such documents and reports did not on their dates or the date
of filing, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. OSI has filed all material documents required to be filed
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by it with the SEC and all such documents complied as to form with the
applicable requirements of law. Copies of all other reports filed by OSI with
the SEC from the date hereof to and including the Effective Date have been or
will be delivered to HAI and Hood. All financial statements and schedules
included in the documents referred to in this SECTION 4.8 were prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis except as noted therein and fairly present the information
purported to be shown therein.
4.9 Litigation and Government Claims. There is no pending suit, claim,
action or litigation or administrative, arbitration or other proceeding or
governmental investigation or inquiry against OSI, Outback , or, to the best of
our knowledge, the partnership which would, severally or in the aggregate, have
a material adverse effect on the business, results of operations, assets or the
condition, financial or otherwise, of OSI and its subsidiaries, taken as a
whole. There are no such proceedings threatened or, to the knowledge of OSI or
Outback, contemplated or any unasserted claims (whether or not the potential
claimant may be aware of the claim), which might, severally or in the aggregate
have a material adverse effect on the business, results of operations, assets or
the condition, financial or otherwise, of OSI and its subsidiaries, taken as a
whole.
4.10 No Violation of Any Instrument. Other than as would not materially
impair the practical realization by Hood of the benefits intended to be
conferred by this Agreement, OSI and Outback are not in violation of or default
under nor has any event occurred that, with the lapse of time or the giving of
notice or both, would constitute a violation of or default under or permit the
termination or the acceleration of maturity of or result in the imposition of a
lien, claim or encumbrance upon any property or asset of OSI or Outback pursuant
to, the articles or certificates of incorporation, bylaws or other chartering or
governance document of OSI and Outback or any note, bond, indenture, mortgage,
deed of trust, evidence of indebtedness, loan or lease agreement, other material
agreement or instrument (including with customers), judgment, order, injunction
or decree to which OSI or Outback is a party, by which OSI or Outback is bound
or to which any of the assets of OSI or Outback are subject.
4.11 Necessary Approvals and Consents. Other than (a) in connection
with or in compliance with the laws of the States of Florida, North Carolina and
South Carolina with respect to effectuating the Merger, (b) consents required to
be obtained from applicable liquor control authorities, (c) consents required to
be obtained from lessors, and (d) under the provisions of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934 as amended, or state
securities or blue sky laws, no authorization, consent, permit or license or
approval of or declaration, registration or filing with, any person or
governmental or regulatory authority or agency is necessary for the execution
and delivery by OSI and Outback of this Agreement, the Merger Agreement and the
other agreements executed or to be executed by either of them in connection with
this Agreement and the consummation by OSI and Outback of the transactions
contemplated by this Agreement and the Merger Agreement.
4.12 Absence of Certain Changes or Events. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1996, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF HAI, HOOD, OSI AND OUTBACK
HAI and Hood, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally on the other hand, covenant with each other as
follows:
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5.1 Notice of any Material Change. Until the Effective Date, each of
HAI, Hood, OSI and Outback shall, promptly after the first notice or occurrence
thereof but prior to the Effective Date, advise the others in writing of any
event or the existence of any state of facts that:
(a) would make any of its representations and warranties in this
Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in the
business, results of operation, working capital, assets, liabilities or
condition (financial or otherwise) of OSI, Outback or HAI and their respective
subsidiaries, taken as a whole. No supplement or amendment to any Disclosure
Schedule shall have any effect for the purpose of determining the satisfaction
of or compliance with the conditions to the obligations of the parties to
consummate the Merger set forth elsewhere in this Agreement.
5.2 Cooperation. Until the Effective Date, each of the parties hereto
shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date and, in
any event, before the Closing Date, the approvals, authorizations and consents
necessary to consummate the transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other parties may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its control, all
conditions precedent to the obligations to close this Agreement.
5.3 Post-Closing Adjustment. As soon as practicable after the Effective
Date, but in no event more than forty-five (45) days thereafter, OSI shall
determine and report in writing to all parties hereto:
(a) the amount of current assets of HAI as of the Effective Date;
(b) the amount of all liabilities of HAI (other than liabilities
specified in Item 11.1 of the HAI Disclosure Schedule to the extent assumed by
Outback) which were not paid in full prior to the Effective Date;
(c) the estimated amount of all federal and state taxes, including, but
not limited to, federal and state income taxes, payable by HAI for the short tax
year ending on the Effective Date;
Upon receipt of such report, Hood (by notice to OSI as provided herein)
shall have a period of thirty (30) days in which to object in writing to any
portion or item of such report. In the event no objection is timely made, OSI's
report shall be final and binding on all parties. If timely objection is made,
the chief financial officer of OSI and Hood (and at the expense of Hood) shall
meet at the offices of OSI and attempt to agree on the items to which objection
was made. If such persons cannot agree within thirty (30) days from the date of
written objection, the items on which agreement has not been reached shall be
submitted to the Tampa, Florida office of Price Waterhouse (or other agreed upon
independent professional certified public accounting firm, which OSI and Hood
shall use their reasonable best efforts to select) for a resolution of such
items and whose decision shall be final and binding on all parties. The fees and
expenses of Price Waterhouse (or other accounting firm) shall be paid by the
non-prevailing party.
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If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Hood within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Hood shall pay such
excess to OSI within ten (10) days of the final determination.
5.4 Distribution and Allocations. The parties acknowledge and agree
that notwithstanding the effective date of the Merger, Outback shall be entitled
to HAI's entire share of Partnership distributions of cash flow, and shall be
allocated HAI's shares of profit and loss, from and after November 1, 1997.
5.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take or cause to be
taken, all actions and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the appropriate vote of the
shareholders of HAI.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of OSI and Outback and Hood shall take all such
necessary action.
(c) Neither Outback, OSI, HAI nor Hood shall take any action which
would jeopardize the characterization of the Merger as a reorganization within
the meaning of Section 368(a) of the Code or the treatment of the Merger for
financial reporting purposes as a pooling of interests.
ARTICLE 6
COVENANTS OF HAI AND HOOD
HAI and Hood covenant and agree with OSI as follows:
6.1 Securities Law Compliance. Hood represents and warrants, and
covenants to Outback and OSI that:
(a) Hood has received all schedules and exhibits and the documents
furnished to HAI pursuant to SECTION 4.8;
(b) Hood has had the opportunity to ask questions of and receive
answers from representatives of the management of OSI concerning the terms and
conditions of the transactions contemplated hereby and to obtain all additional
information that OSI possesses or could acquire without unreasonable expense
that is necessary to verify the accuracy of information furnished to Hood.
(c) OSI and Outback have furnished him with all information requested
and full access to materials concerning OSI and Outback which Hood and/or his
advisors deemed necessary to properly evaluate the Merger. Such information and
access have been made available and utilized to the extent Hood considers
necessary and advisable in making an informed investment decision, and Hood has
consulted his own tax advisor and understands the evaluation of such materials
may require the assistance of experts and Hood has utilized such experts to the
extent deemed necessary.
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(d) Hood understands that the OSI Common Stock to be received is an
investment of a speculative nature and Hood must bear the risks thereof for an
indefinite period of time. Hood has adequate means for providing for his needs,
is able to bear the economic risk of the investment and has no need for
liquidity in the OSI Common Stock to be received in the Merger.
(e) Hood and/or his representatives or advisors who have acted with or
on behalf of Hood and who have advised Hood in this matter have such knowledge
and experience in financial and business matters that Hood is capable of
evaluating the merits and risks of the Merger for OSI Common Stock.
(f) Hood is participating in the Merger solely for his account as a
private investment, and Hood has no present agreement, understanding,
arrangement or intention to sell or transfer all or any portion of the shares of
OSI Common Stock to be issued in the Merger to any other person or persons. Hood
does not presently intend to enter into any such agreement or undertaking and
there are no present circumstances which will compel Hood to sell any OSI Common
Stock so received. Hood will not sell or otherwise transfer the shares (except
for de minimis gifts of shares) unless they are registered under the Securities
Act and applicable state securities laws or, in the opinion of OSI and its
counsel, an exemption from registration is available therefor.
(g) The investment by Hood in OSI Common Stock pursuant to the Merger
is a suitable investment for Hood given the investment goals and objectives of
Hood.
(h) Hood agrees to indemnify and hold OSI and Outback and each of their
respective officers, directors and advisors harmless against all liability
arising out of or in connection with any purchase, resale or distribution by
Hood of any OSI Common Stock received hereby which is effected other than in
strict compliance with the terms hereof and applicable law.
(i) Hood understands that the shares of OSI Common Stock to be issued
in the Merger will not be registered under the Securities Act, nor any state
securities laws, and such OSI Common Stock may not be sold or transferred except
in compliance with such laws. Hood understands that the shares of OSI Common
Stock issued to Hood in the Merger will be subject to the limited registration
rights described herein and Hood agrees to the terms hereof. Such rights shall
be personal to Hood (except as provided in Section 7.5) and shall automatically
terminate with respect to any shares of OSI Common Stock which Hood assigns or
transfers, upon attachment or seizure by or for the benefit of any creditors of
Hood, or upon the occurrence of any other event which results in a succession to
the ownership of any such OSI Common Stock by operation of law. Neither OSI nor
Outback will have any obligation to register any such OSI Common Stock other
than as provided in ARTICLE VII hereof. Hood agrees to comply with the
restrictions on transfer contained in Section 6.2 hereof.
(j) Hood understands that OSI will place an appropriate legend on the
certificate representing OSI Common Stock to be received restricting the
transfer of the shares and stop-transfer instructions will be given to the
transfer agent for the OSI Common Stock with respect to such certificates.
(k) Hood is a natural person (i) whose net worth (the excess of total
assets over total liabilities), individually or jointly with his spouse, exceeds
$1,000,000 (inclusive of the value of home, home furnishings and automobiles);
or (ii) who had an Individual Annual Adjusted Gross Income in excess of $200,000
in each of the two most recent tax years or joint income with Hood's spouse in
excess of $300,000 in each of those years and reasonably expects to reach the
same income level in the current tax year.
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6.2 Restriction on Transfer.
(a) Hood covenants and agrees not to sell, convey, pledge, grant a
security interest in, assign or otherwise transfer or encumber any of the OSI
Common Stock to be issued in the Merger except in accordance with state and
federal securities laws and with the following provisions:
(i) Hood may transfer twenty percent (20%) of the OSI Common
Stock received in the Merger at any time after November 1, 1997;
(ii) Hood may transfer an additional twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after November
1, 1998;
(iii) Hood may transfer an additional twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after November
1, 1999;
(iv) Hood may transfer an additional twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after November
1, 2000;
(v) Hood may transfer the remaining twenty percent (20%) of
the OSI Common Stock received in the Merger at any time after November
1, 2001.
(b) Notwithstanding the provisions of (a) above, Hood may make bona
fide gifts both inter vivos and testamentary of OSI Common Stock to immediate
family members or trusts of which immediate family members are the exclusive
beneficiaries provided, however, the donees of such gifts shall take such OSI
Common Stock subject to the restrictions contained in (a) above. For purposes of
determining Hood's compliance with (i) through (v) above, any transfers by
donees shall be aggregated with, and shall be considered as, transfers by Hood
for purposes of calculating compliance with (i) through (v) of subsection (a).
(c) OSI's transfer agent shall maintain stop transfer instructions on
the OSI Common Stock issued in the Merger and the certificates representing such
shares shall bear an appropriate legend evidencing the restrictions contained in
(a) above.
6.3 Payment of Liabilities. HAI and Hood covenant and agree that all
debts and liabilities of HAI relating to periods prior to the Closing Date shall
be paid or satisfied in full prior to the Effective Date, except only current
liabilities and those debts and liabilities of HAI specified in Item 11.1 of the
Disclosure Schedules.
6.4 Pooling. Hood agrees that until such time as financial results of
OSI covering at least thirty (30) days of combined operations of OSI and HAI
subsequent to the Effective Date have been published, he will not sell or
otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
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ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with HAI and
Hood as follows:
7.1 Mandatory Registration of OSI Common Stock.
(a) Hood shall have the right to require OSI, by written notice to OSI
at any time during: (i) the ten day period commencing on publication of
financial results of OSI which include at least thirty (30) days of combined
operations of OSI and HAI subsequent to the Merger; or (ii) the ten day period
commencing upon public release of OSI's net income for calendar year 1997; or
(iii) the ten day period commending upon public release of OSI's net income for
the first quarter of 1998, to use its best efforts to cause a registration,
qualification or compliance under any federal or state securities laws to be
effected as soon as practical, but not later than thirty (30) days after receipt
of Hood's written notice, with respect to all or any portion of the OSI Common
Stock then held by Hood and specified in such notice (hereinafter, collectively
the "Registrable Shares") and OSI will use its best reasonable efforts to cause
such registration, qualification or compliance as may be so requested to be
effective and to be kept effective for a period (not to exceed forty-five (45)
days) as would permit or facilitate, to the extent so requested, the sale and
distribution of the Registrable Shares, including, without limitation,
registration under the Securities Act of 1933, as then in effect or under any
similar statute then in effect (the "Act"), and appropriate related
qualification under applicable state securities laws and appropriate compliance
with any other governmental requirements; provided, however, that the maximum
number of Registrable Shares under this SECTION 7.1(A) shall be a number of
shares equal to twenty percent (20%) of the total number of shares of OSI Common
Stock issued pursuant to the Merger, but reduced by the number of shares of such
OSI Common Stock sold or transferred other than pursuant to the provisions of
this SECTION 7.1. Once OSI shall have fully complied with one registration
request Hood shall not have any right to request any additional registrations.
(b) Notwithstanding the foregoing, OSI shall not be required to effect
any registration, qualification or compliance under this SECTION 7.1 if and to
the extent, in the opinion of counsel for OSI (which opinion shall also be
addressed to Hood requesting registration of Registrable Shares), the proposed
public offering or transfer of the number of Registered Shares, as to which
registration is requested, is exempt from registration under the Act and the
securities laws of the states in which the Registrable Shares are to be sold or
transferred and the Registrable Shares would not constitute restricted
securities in the hands of the purchaser or transferee.
(c) OSI shall be entitled to postpone the filing or effectiveness of
any registration statement otherwise required to be prepared and filed by OSI
pursuant to this SECTION 7.1, for a reasonable period of time, but not in excess
of ninety (90) days (a "Blackout Period"), if the chief executive officer or
chief financial officer of OSI determines that in such executive officer's
reasonable judgment and good faith that the registration and distribution of the
Registrable Shares would materially interfere with any pending financing,
acquisition, or corporate reorganization or other corporate development
involving OSI or any of its subsidiaries or would require premature disclosure
thereof and promptly gives Hood written notice of such determination containing
a general statement of the reasons for such postponement and an approximation of
the anticipated delay; provided, however, that the aggregate number of days
included in all Blackout Periods during any consecutive twelve (12) months
during the shall not exceed one hundred eight (180) days; and provided, further,
however, that a period of at least forty-five (45) days shall elapse between the
termination of any Blackout Period and the commencement of the immediately
succeeding Blackout Period. If OSI shall so postpone the filing of a
registration statement Hood shall have the right to withdraw the request for
registration by giving written notice to OSI within twenty (20) days after
receipt
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of the notice of postponement (and, in the event of such withdrawal, such
request shall not be counted for purposes of determining the number of, or
required timing for, requests for registration to which the holders of the
Registrable Shares are entitled pursuant to SECTION 7.1.
(d) Notwithstanding the foregoing, OSI shall not be required by this
SECTION 7.1 to register Registrable Shares under the Securities Act or under any
state securities law at any time after the date one year following the Effective
Date (or such other date as coincides with the expiration of the general holding
period requirement under Rule 144, should the general holding period requirement
of Rule 144 or any successor rule be modified), if OSI is then and has been
throughout such period, current in all filings required to comply with the
current public information requirement of Rule 144. OSI will cooperate with Hood
in delivering opinions necessary to effect transfers under Rule 144.
7.2 Registration Procedures. In the case of each registration,
qualification or compliance effected by OSI pursuant to SECTION 7.1, OSI will:
(a) keep each holder of Registrable Shares advised in writing at the
initiation of proceedings of each registration, qualification or compliance and
as to the completion thereof,
(b) furnish each holder of Registrable Shares with such number of
prospectuses and such other documents as may be reasonably requested, and
(c) keep such registration, qualification or compliance effective until
all sales or distributions contemplated in connection therewith are completed;
provided that OSI shall not be obligated to keep such registration,
qualification or compliance effective for more than forty-five (45) days.
7.3 Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance effected by OSI pursuant to this
ARTICLE 7, including, without limitation, all registration and filing fees, fees
and expenses of complying with securities and blue sky laws, printing expenses,
fees and disbursements of counsel for OSI and all expenses of any special audits
incidental to or required by such registration (collectively, the "Registration
Expenses") shall be borne by OSI.
7.4 Adjustments in Number of Shares. If the outstanding shares of OSI
Common Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared, with a record date subsequent to the Effective Date and prior
to the sale of all Registrable Shares, the number of Registrable Shares shall be
adjusted to accurately reflect such change.
7.5 Transferees. The rights of Hood under SECTION 7.1 are personal to
Hood and shall not inure to the benefit of any other person nor any transferees
or assignees of Hood's OSI Common Stock; provided, however, such rights shall
inure to the benefit of donees of bona fide gifts (both inter vivos and
testamentary) who are members of the donor's immediate family.
7.6 Employment Agreements. Solely with respect to the Merger, and any
consequential termination of any partnership by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between the Partnership, as
employer, and the general managers of the Partnership's Outback Steakhouse(R)
restaurants, as employees. Outback shall succeed to all rights and obligations
of the Partnership under such Employment Agreements. Nothing contained herein
shall be construed as in any way limiting Outback's right to terminate any such
Employment Agreement as a result of any circumstance or event other than the
Merger and consequential termination of the Partnership by operation of law.
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7.7 Assumed Liabilities. OSI and Outback agree to assume and pay the
liabilities specified in Item 11.1 (subject to the amount limits specified in
Item 11.1 of the Disclosure Schedules) and to indemnify and hold harmless Hood
from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of HAI, Hood, OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 Consents to Transaction. HAI, Outback and OSI shall have received
all consents or approvals and made all applications, requests, notices and
filings with, any person, governmental authority or governmental agency required
to be obtained or made in connection with the consummation of the transactions
contemplated by this Agreement. There shall have been obtained from all state
and local governments and governmental agencies all approvals and consents
necessary to enable HAI and/or the Partnership, as applicable, to transfer their
liquor licenses and permits to Outback, to enable Outback to assume such
licenses and permits or to enable Outback to operate restaurants (of the kind
and quality customarily operated by Outback) using such permits or licenses.
Copies of all consents and approvals received by any party pursuant to this
SECTION 8.1 shall be furnished to the other party.
8.2 Absence of Litigation. No governmental agency or authority shall
have instituted or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and no order, judgment or decree by
any court or governmental agency or authority shall be in effect that enjoins,
restrains or prohibits the same or otherwise would materially interfere with the
operation of the assets and business of HAI or the Partnership or OSI and its
subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
8.3 Dissenter's Rights. The number of shares of capital stock of HAI
for which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.12 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF HAI
The obligations of HAI and Hood to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
9.1 Compliance. OSI and Outback shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
OSI and Outback on or before the Closing Date.
9.2 Representations and Warranties. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to HAI and Hood pursuant hereto
or in connection with the transactions contemplated hereby, shall have
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been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
9.3 Material Adverse Changes. Since the date of OSI's most recent 10-Q,
as filed with the Securities Exchange Commission, through the date hereof, there
shall have occurred no material adverse change in the business, properties,
assets, liabilities, results of operations or condition, financial or otherwise,
of OSI and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 Compliance. HAI and Hood shall have or shall have caused to be
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
any of them on or before the Closing Date.
10.2 Representations and Warranties. All of the representations and
warranties made by HAI and/or Hood in this Agreement, the Disclosure Schedule,
and in all certificates and other documents delivered by HAI or Hood pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
10.3 Current Financial Status. OSI shall have received the unaudited
financial statements of HAI as of August 31, 1997, for the period then ended.
10.4 Material Adverse Changes. Since December 31, 1996, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of HAI
or the Partnership.
10.5 Pooling. OSI shall have received a letter from Deloitte & Touche,
in form and substance satisfactory to OSI and dated not more than five days
prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
ARTICLE 11
INDEMNIFICATION
Hood, on the one hand, and OSI and Outback, jointly and severally, on
the other hand, agree as follows:
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11.1 Indemnification Based on Agreement. Subject to the limitations
contained in SECTION 11.2 hereof, Hood shall indemnify and hold harmless OSI,
Outback and HAI, and OSI, Outback and HAI, jointly and severally, shall
indemnify and hold harmless Hood, against any losses, claims, damages or
liabilities to which such indemnified party may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any facts or circumstances that would constitute a breach
by the other of any representation, warranty or covenant contained herein or in
any agreement executed pursuant hereto and will reimburse any legal or other
expenses reasonably incurred by any indemnified party in connection with
investigating or defending any such loss, claim, damage, liability or action.
In addition to the above, Hood shall indemnify OSI, Outback and HAI, as
provided in the first paragraph of this SECTION 11.1, against any loss, claim,
damage or liability arising out of (i) any tax liability of HAI for any period
prior to and including November 1, 1997 and (ii) any debt of HAI (other than the
debts specified in Item 11.1 of the Disclosure Schedule to the extent assumed by
Outback), and (iii) all claims, obligations, causes of action and liabilities,
of whatever kind or character, of any of HAI which arise out of or are based
upon events first occurring on or before the Effective Date, except only the
liabilities assumed by Outback as specified in Item 11.1 of the Disclosure
Schedule.
11.2 Limitation. Hood shall have no obligation under SECTION 11.1 to
indemnify OSI, Outback or HAI for any liability, loss, claim or damage arising
out of or based upon facts or actions first occurring after the Effective Date.
All obligations of indemnity (other than those relating to tax obligations of
HAI under SECTION 11.1 above which shall continue for the period specified in
SECTION 12.4(B) hereof) shall terminate two (2) years from the Closing Date;
provided, however, the obligations of indemnity shall not terminate with respect
to any matter for which indemnification is claimed within two (2) years from the
Closing Date.
11.3 Cooperation. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 Notice. An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of service
or summons to appear in any action begun in respect of which indemnity may be
sought hereunder. Failure to so notify the indemnifying party or parties shall
cause the indemnified party to be liable for any damage caused by failure to
give timely notice. The indemnifying party or parties may participate at their
own expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after receipt of
such notice, they may assume the defense of such action with counsel chosen by
the indemnifying party or parties and approved by the indemnified party in such
action, unless the indemnified party reasonably objects to such assumption on
the ground that its counsel has advised it that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party shall have
the right to employ counsel approved by the indemnifying party or parties. If
the indemnifying party or parties assume the defense of such action, the
indemnifying party or parties shall not be liable for fees and expenses of
counsel for the indemnified party incurred thereafter in connection with such
action. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel for the indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances
unless, in the reasonable opinion of such counsel, there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more indemnified parties.
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ARTICLE 12
MISCELLANEOUS
12.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of HAI:
(a) by mutual consent of Hood, HAI and OSI;
(b) by OSI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of HAI or Hood set forth herein
or if there has been any material failure on the part of HAI or Hood to comply
with their obligations hereunder;
(c) by HAI or Hood if there has been a material misrepresentation or
breach of warranty in the representations and warranties of OSI or Outback set
forth herein or if there has been any material failure on the part of OSI or
Outback to comply with its obligations hereunder;
(d) by either OSI, HAI or Hood, if the transactions contemplated by
this Agreement have not been consummated by November 30, 1997, unless such
failure of consummation is due to the failure of the terminating party to
perform or observe the covenants, agreements and conditions hereof to be
performed or observed by it at or before the Closing Date;
(e) by either OSI, or HAI if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived by it at
or before the Closing Date; and
(f) by either HAI or OSI if the transactions contemplated hereby
violate any non-appealable final order, decree or judgment of any court or
governmental body or agency having competent jurisdiction.
12.2 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
12.3 Entire Agreement. This Agreement and the exhibits and Disclosure
Schedule hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 Survival of Representations and Warranties
(a) The representations, warranties and indemnification obligations of
OSI and Outback contained herein or in any exhibit, certificate, document or
instrument delivered pursuant to this Agreement shall survive the Closing for a
period of two years; provided, however, that the obligations of OSI and Outback
under ARTICLE 7 and ARTICLE 11 hereof shall survive for the periods provided
therein.
(b) Except where otherwise specifically provided in this Agreement, the
representations, warranties and indemnification obligations of Hood contained
herein or in any exhibit, schedule, certificate,
20
<PAGE> 25
document or instrument delivered pursuant to this Agreement shall survive the
Closing for a period of three years from the Effective Date; provided, however,
the representations and warranties contained in SECTION 2.7 shall survive the
Closing for a period ending four years after the filing of HAI's federal income
tax return for the period including the Effective Date.
12.5 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 Notices. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
If to HAI or Hood: HOOD & ASSOCIATES, INC.
1809 East Boulevard - Suite 202
Charlotte, North Carolina 28203
Attention: Dennis L. Hood
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow
General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 Successors and Assigns. This Agreement and the rights, interests
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 Waiver and Other Action. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
12.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be
21
<PAGE> 26
added automatically as part of this Agreement, a provision as similar in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
12.11 Headings. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 Construction. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 Jurisdiction and Venue. The parties agree that any action brought
by either party against the other in any court, whether federal or state, shall
be brought within the State of Florida in the judicial circuit in which OSI has
its principal place of business. Each party hereby agrees to submit to the
personal jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
12.14 Enforcement. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 Further Assurances. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
12.16 Equitable Remedies. The parties hereto acknowledge that a refusal
by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- --------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
22
<PAGE> 27
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- --------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
"HAI"
Attest: HOOD & ASSOCIATES, INC.
a Florida corporation
By: By:
----------------------------- --------------------------------
SHEILA T. HOOD DENNIS L. HOOD
Title: Secretary Title: President
Witness: "Hood"
------------------------------------
DENNIS L. HOOD, individually
23
<PAGE> 28
EXHIBIT A
ARTICLES OF MERGER
THIS AGREEMENT, PLAN AND ARTICLES OF MERGER ("Articles of Merger"),
dated as of November 1, 1997, is entered into by and among HOOD & ASSOCIATES,
INC., a Florida corporation ("HAI"); OUTBACK STEAKHOUSE, INC., a Delaware
corporation ("OSI"); and OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation ("Outback").
W I T N E S E T H:
WHEREAS, HAI is a corporation duly organized and validly existing under
the laws of the State of Florida, and the authorized and outstanding capital
stock of HAI is as follows:
<TABLE>
<CAPTION>
Authorized Shares Issued
HAI Capital Stock and Outstanding
--- ------------- ---------------
<S> <C> <C>
HOOD & ASSOCIATES, INC. 10,000 Common Shares 1,000 Common Shares
</TABLE>
WHEREAS, OSI is a corporation duly organized and validly existing under
the laws of the State of Delaware; and
WHEREAS, OSI is authorized to issue 2,000,000 shares of Preferred
Stock, par value $.01, none of which are outstanding and 200,000,000 shares of
Common Stock, $.01 par value (the "OSI Common Stock"), of which approximately
48,030,588 shares of OSI Common Stock are issued and outstanding as of March 7,
1997; and
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, the respective Boards of Directors of each of HAI, Outback,
and OSI deem it advisable, for the benefit of their respective corporations and
shareholders, that HAI be merged into Outback, with Outback as the surviving
corporation (in its capacity as surviving corporation, Outback is hereinafter
sometimes referred to as the "Surviving Corporation"), pursuant to the
provisions of Sections 607.1101-607.1107 of the Florida Business Corporation Act
(the "Florida Act") and have approved these Articles of Merger; and
WHEREAS, the Board of Directors of HAI has directed that these Articles
of Merger be submitted to its voting shareholder for approval and adoption and
the voting shareholder of HAI has approved and adopted these Articles of Merger
in accordance with Florida Law and the corporate governance documents of HAI by
unanimous written consent dated September , 1997; and
WHEREAS, OSI as the sole shareholder of Outback has approved and
adopted these Articles of Merger by written consent on September 30, 1997; and
WHEREAS, the Agreement and Plan of Reorganization (the "Reorganization
Agreement"), which Outback, OSI, and HAI have entered, contemplates the
execution and delivery of these Articles of Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for the purpose of prescribing the terms and
conditions of the merger and such other details and provisions as are deemed
necessary or desirable, the parties hereto agree as follows:
1
<PAGE> 29
1. MERGER. The names of the corporations which propose to merge are
HOOD & ASSOCIATES, INC., a North Carolina corporation ("HAI"), and OUTBACK
STEAKHOUSE OF FLORIDA, INC. ("Outback"). In accordance with the provisions of
the Florida Act at the Effective Date (as hereinafter defined), HAI shall be
merged into Outback, and Outback shall be the Surviving Corporation and as such
shall continue to be governed by the laws of the State of Florida. The plan of
merger set forth in these Articles of Merger was duly authorized by each of
Outback and HAI, respectively, by all action required by the laws under which it
was incorporated or organized and by its constituent documents.
2. CONTINUATION OF CORPORATE EXISTENCE. The corporate existence and
identity of Outback, with all its purposes, powers, franchises, privileges,
rights and immunities, shall continue unaffected and unimpaired by the merger
and the corporate existence and identity of HAI with all its purposes, powers,
franchises, privileges, rights and immunities at the Effective Date shall be
merged with and into that of Outback, and Outback as the Surviving Corporation
shall be vested fully therewith, and the separate corporate existence and
identity of HAI shall thereafter cease except to the extent continued by
statute.
3. EFFECTIVE DATE. The merger shall become effective (hereinbefore and
hereinafter called the "Effective Date") upon the later of (i) filing of these
Articles of Merger with the Secretary of State of the State of Florida; or (ii)
November 1, 1997. Such Effective Date shall be indicated on Certificate of
Merger issued by the Secretary of State of the State of Florida pursuant to the
Florida Act.
4. CORPORATE GOVERNMENT.
(a) The Certificate of Incorporation of Outback, as in effect
on the Effective Date, shall continue in full force and effect and
shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Outback, as in effect as of the Effective
Date, shall continue in full force and effect and shall be the Bylaws
of the Surviving Corporation.
(c) The members of the Board of Directors and the officers of
the Surviving Corporation shall be the persons holding such positions
for Outback as of the Effective Date.
5. CONVERSION OF SHARES. The manner and basis of converting the capital
stock of HAI into OSI Common Stock, subject to SECTION 5(C) below with respect
to fractional shares, shall be as follows:
(a) Each share of HAI common stock which shall be outstanding
immediately prior to the Effective Date shall at the Effective Date, by
virtue of the merger and without any action on the part of the holder
thereof, be converted into and exchanged for 231.725 shares of OSI
Common Stock.
(b) The Outback Capital Stock outstanding immediately prior to
the Effective Date shall be unaffected by the merger.
(c) The stock transfer books of HAI shall be closed as of the
close of business on the Effective Date and no transfer of record of
any of its capital stock shall take place thereafter.
(d) No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead one whole share
of OSI Common Stock shall be issued to each holder of shares of common
stock of the merging corporations whose fractional share interest is .5
or more of one whole share; each fraction of less than .5 of one whole
share shall be disregarded.
2
<PAGE> 30
(e) Notwithstanding the foregoing, the OSI shall not be
required to issue or distribute more than 231,725 shares of OSI Common
Stock pursuant to the merger, less any shares reserved for dissenters'
rights, as described in Article 1 of the Reorganization Agreement.
(f) All of the shares of OSI Common Stock, when delivered
pursuant to the provisions of these Articles of Merger, shall be
validly issued, fully paid and non-assessable.
(g) At the Effective Date, each holder of certificates
representing shares of the common stock of HAI shall thereupon cease to
have any rights with respect to such shares and shall be deemed to be a
shareholder of OSI to the extent of the number of shares of OSI Common
Stock to which such shareholder shall be entitled in accordance with
these Articles of Merger; and shall surrender certificates representing
shares of the common stock of HAI to the OSI, whereupon such holder
shall receive a certificate or certificates for the number of shares of
OSI Common Stock to which such holder is entitled hereunder.
6. RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under the laws of the
State of Florida.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of Outback, and HAI and all property, real, personal and mixed
and all debts due on whatever account, including subscription to shares
and all other chooses in action and every other interest of or
belonging or due to HAI shall be taken and deemed to be transferred or
invested in the Surviving Corporation without further act or deed.
(c) At the Effective Date, the Surviving Corporation shall
thenceforth be responsible and liable for all liabilities and
obligations of HAI and any claim existing or action or proceeding
pending by or against HAI or Outback may be prosecuted as if the merger
had not occurred or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the property
of HAI or Outback shall be impaired by the merger.
7. CONSENT OF SHAREHOLDERS. These Articles of Merger has been adopted
by the shareholders of HAI in accordance with Florida Law and its corporate
governance documents by unanimous written consent effective as of September ,
1997. These Articles of Merger has been adopted by the written consent of the
sole shareholder of Outback dated September 30, 1997 pursuant to the Florida
Act.
8. DISSENTING SHAREHOLDERS. If any shareholder of HAI files a written
objection to these Articles of Merger before a vote of the shareholders is taken
hereon and complies with the further provisions of the Florida Act, he may be
paid the fair value of his shares. If any shareholder of HAI lawfully elects,
pursuant to the Florida Act, to exercise or pursue his right to dissent from any
of the corporate actions referred to in these Articles of Merger with respect to
the shares of common stock of HAI owned by such shareholder (the "Dissenting
Shares"), such shareholder shall be entitled to exercise only those rights
available to him as set forth in the Florida Act, and, in that event, only in
the manner set forth therein. During the period in which any such shareholder
shall be exercising or pursuing any of such shareholder's rights of dissent as
specified in the Florida Act, as applicable, such shareholder shall have no
other rights pursuant to or arising from these Articles of Merger.
3
<PAGE> 31
9. REORGANIZATION AGREEMENT. These Articles of Merger is intended to
supplement the Reorganization Agreement and is not intended to conflict with or
supersede that agreement and, in the event of any conflict, the provisions of
the Reorganization Agreement shall control.
10. COPIES. A copy of these Articles of Merger shall be on file at the
principal place of business of the Surviving Corporation located at 550 North
Reo Street, Suite 200, Tampa, Florida 33609. A copy of these Articles of Merger
will be furnished by the Surviving Corporation, on request and without cost, to
any shareholder of any corporation that is a party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement, Plan
and Articles of Merger as of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By: By:
----------------------------- --------------------------------
JOSEPH J. KADOW ROBERT D. BASHAM
Title: Secretary Title: President
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of January, 1998, before me, personally came ROBERT D.
BASHAM and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE, INC., a Delaware corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By: By:
----------------------------- --------------------------------
JOSEPH J. KADOW PAUL E. AVERY
Title: Secretary Title: President
4
<PAGE> 32
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of January, 1998, before me, personally came PAUL E.
AVERY and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE OF FLORIDA, INC., a Florida corporation, who are personally known to
me, and each being first duly sworn, did depose and say that they executed the
foregoing on behalf of said corporation by order of the Board of Directors of
said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
"HAI"
Attest: HOOD & ASSOCIATES, INC.
a Florida corporation
By: By:
----------------------------- --------------------------------
SHEILA T. HOOD DENNIS L. HOOD
Title: Secretary Title: President
STATE OF NORTH CAROLINA )
) ss
COUNTY OF )
On this ______ day of January, 1998, before me, personally came DENNIS L.
HOOD and SHEILA T. HOOD as President and Secretary of HOOD & ASSOCIATES, INC., a
North Carolina corporation, who are personally known to me, and each being first
duly sworn, did depose and say that they executed the foregoing on behalf of
said corporation by order of the Board of Directors of said corporation.
(NOTARY SEAL)
------------------------------------
(Notary Signature)
NOTARY PUBLIC
Commission No.
---------------------
5
<PAGE> 33
EXHIBIT B
DISCLOSURE SCHEDULES
Item 2.7 Any asset acquired or disposed of, or indebtedness incurred,
assumed, guaranteed, endorsed, paid or discharged; any material
amount of assets subjected or permitted to be subjected to any
liability or obligation or to any lien, claim or encumbrance of
any kind, except in the ordinary course of business or pursuant
to agreements in force at the date of this Agreement and
identified below:
None.
Item 2.9(a) Material liabilities or obligations, contingent or otherwise of
the Partnership of any nature:
None.
Item 2.9(b) Liabilities or obligations of HAI (other than material
liabilities arising solely by reason of HAI's status as a
partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise:
None.
Item 2.10 Liens and encumbrances on real and personal property purchased
by HAI or the Partnership since the date of the Balance Sheet,
except for liens for taxes, assessments or other governmental
charges not yet due and payable.
None.
Item 2.11 Contracts and commitments not in the ordinary course of the
Partnership's business.
None.
Item 2.12 Pending suits, claims, actions or litigation or administrative,
arbitration or other proceedings or governmental investigations
or inquiries against HAI or the Partnership to which any of
their business or assets is subject.
None.
Item 2.13 Violations and defaults of HAI and the Partnership.
None.
Item 11.1 Current liabilities and those debts and liabilities of HAI
agreed to be assumed by Outback:
None.
08/07/97
B-1
<PAGE> 1
EXHIBIT 4.26
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
AND
AARON RESTAURANT GROUP, LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 - PLAN OF ACQUISITION............................................1
1.1 The Merger........................................................1
1.2 Adjustments.......................................................2
1.3 Closing...........................................................2
1.4 Execution and Delivery of Closing Documents.......................2
1.5 Execution and Filing of Merger Documents..........................2
1.6 Effectiveness of Merger...........................................3
1.7 Further Assurances................................................3
1.8 Certificates......................................................3
1.9 Closing of Transfer Books.........................................3
1.10 Fractional Shares.................................................3
1.11 Accounting Treatment..............................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF ARG AND AARON................3
2.1 Organization and Good Standing....................................3
2.2 Power and Authority...............................................3
2.3 Authority and Validity............................................4
2.4 Binding Effect....................................................4
2.5 Compliance with Other Instruments.................................4
2.6 Capitalization of ARG.............................................4
2.7 Absence of Certain Changes........................................5
2.8 Tax Liabilities...................................................6
2.9 No Undisclosed Liabilities........................................6
2.10 Title to Properties...............................................6
2.11 Contracts.........................................................6
2.12 Litigation and Government Claims..................................6
2.13 No Violation of Any Instrument....................................7
2.14 Necessary Approvals and Consents..................................7
2.15 Compliance With Laws..............................................7
2.16 Accuracy of Information Furnished.................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF AARON........................7
3.1 Authority and Validity............................................7
3.2 Binding Effect....................................................8
3.3 Ownership.........................................................8
3.4 Voting............................................................8
3.5 Residency.........................................................8
3.6 Compliance with Other Instruments.................................8
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK..............8
4.1 Organization and Good Standing....................................8
4.2 Foreign Qualification.............................................8
4.3 Power and Authority...............................................8
4.4 Authority and Validity............................................8
4.5 Binding Effect....................................................9
4.6 Compliance with Other Instruments.................................9
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.7 Capitalization of OSI.............................................9
4.8 SEC Reports.......................................................9
4.9 Litigation and Government Claims..................................10
4.10 Necessary Approvals and Consents..................................10
4.11 Absence of Certain Changes or Events..............................10
ARTICLE 5 - JOINT COVENANTS OF ARG, AARON, OSI AND OUTBACK.................10
5.1 Notice of any Material Change.....................................10
5.2 Cooperation.......................................................10
5.3 Post-Closing Adjustment...........................................11
5.4 Distribution and Allocation.......................................11
5.5 Additional Agreements.............................................11
ARTICLE 6 - COVENANTS OF ARG AND AARON.....................................12
6.1 Securities Law Compliance; Restrictions on Shares.................12
6.2 Payment of Liabilities............................................13
6.3 Pooling...........................................................13
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK...................................13
7.1 Employment Agreements.............................................13
7.2 Assumed Liabilities...............................................14
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS..............14
8.1 Consents to Transaction...........................................14
8.2 Absence of Litigation.............................................14
8.3 Dissenter's Rights................................................14
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF ARG.....................14
9.1 Compliance........................................................14
9.2 Representations and Warranties....................................15
9.3 Material Adverse Changes..........................................15
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND
OUTBACK...........................................................15
10.1 Compliance........................................................15
10.2 Representations and Warranties....................................15
10.3 Current Financial Status..........................................15
10.4 Material Adverse Changes..........................................15
10.5 Pooling...........................................................15
ARTICLE 11 - INDEMNIFICATION...............................................15
11.1 Indemnification Based on Agreement................................15
11.2 Limitation........................................................16
11.3 Cooperation.......................................................16
11.4 Notice............................................................16
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 12 - MISCELLANEOUS.................................................17
12.1 Termination.......................................................17
12.2 Expenses..........................................................17
12.3 Entire Agreement..................................................17
12.4 Survival of Representations and Warranties........................17
12.5 Counterparts......................................................18
12.6 Notices...........................................................18
12.7 Successors and Assigns............................................18
12.8 Governing Law.....................................................18
12.9 Waiver and Other Action...........................................18
12.10 Severability......................................................18
12.11 Headings..........................................................19
12.12 Construction......................................................19
12.13 Jurisdiction and Venue............................................19
12.14 Enforcement.......................................................19
12.15 Further Assurances................................................19
12.16 Equitable Remedies................................................19
EXHIBIT A
ARTICLES OF MERGER.........................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES.......................................................B-1
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered effective as of the 1st day of December, 1997, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), AARON RESTAURANT GROUP, LTD., a
Delaware corporation ("ARG") and MARK AARON, an individual residing in the State
of Pennsylvania ("Aaron").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Aaron is the sole owner of the issued and outstanding common stock
of ARG, and Aaron is the sole director, President and is responsible for the
day-to-day operations of ARG; and
WHEREAS, Outback and ARG have entered into that certain Florida limited
partnership known as Outback/Mid Atlantic-I, Limited Partnership
("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
State of Delaware, New Jersey and Pennsylvania; and
WHEREAS, the Board of Directors of ARG has approved the merger of ARG into
Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, ARG will be merged with and into Outback
and all of the outstanding shares of capital stock of ARG will be converted into
shares of Common Stock, par value $.01, of OSI (the "OSI Common Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the terms
and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 The Merger. Subject to and upon the terms and conditions contained
herein, ARG shall be merged with and into Outback, with Outback being the
surviving corporation, in accordance with the Articles of Merger substantially
in the form attached to this Agreement as EXHIBIT A (the "Merger Agreement"),
which will be executed and delivered by OSI, Outback, and ARG prior to the
Merger. As a result of the Merger, each voting and nonvoting common share of ARG
outstanding immediately before
1
<PAGE> 6
the Effective Date (as herein defined) shall, by virtue of the Merger and
without any further action being required by the holders thereof, be converted
into and exchanged for 1,750 shares of OSI Common Stock.
1.2 Adjustments.
(a) Except as otherwise provided in this SECTION 1.2, the total number
of shares of OSI Common Stock to be issued pursuant to the Merger shall be
One Hundred Seventy-Five Thousand 175,000.
(b) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, (i) the outstanding shares of capital
stock of ARG shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares, or readjustment, with a record
date within such period, or a stock dividend thereon shall be declared with
a record date within such period or (ii) ARG shall have issued additional
shares of its capital stock, the number of shares of OSI Common Stock
received in exchange for each share of ARG's capital stock shall be
adjusted so that the aggregate number of shares of OSI Common Stock
received in exchange for all shares of ARG's capital stock (assuming no
Dissenting Shares) remains at 175,000.
(c) If, between the date of this Agreement and the Closing Date or the
Effective Date, as the case may be, the outstanding shares of OSI Common
Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares, or readjustment, with a record
date within such period, or a stock dividend thereon shall be declared with
a record date within such period, the number of shares of OSI Common Stock
received in exchange for each share of capital stock of ARG (as specified
in SECTION 1.1 hereof) shall be adjusted to accurately reflect such change.
1.3 Closing. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on December 1, 1997, or on such date and
at such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than February
27, 1998, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 Execution and Delivery of Closing Documents. Before the Closing, each
party shall cause to be prepared and at the Closing the parties shall execute
and deliver each agreement and instrument required by this Agreement or the
Merger Agreement to be so executed and delivered and not theretofore
accomplished. At the Closing, each party also shall execute and deliver such
other appropriate and customary documents as the other parties reasonably may
request for the purpose of consummating the transactions contemplated by this
Agreement and the Merger Agreement. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
1.5 Execution and Filing of Merger Documents. At the time of completion of
the Closing, OSI, Outback, ARG and Aaron agree to take the following actions:
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(a) to execute and deliver all documents and certificates relating to
the Merger required to be executed by them that have not already been so
executed and that are required under applicable federal, state and local
laws to be filed in order validly to effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary of
State of the State of Florida and the Secretary of State of the State of
Delaware and a Certificate of Merger to be issued by each such officer.
1.6 Effectiveness of Merger. The Merger shall become effective under the
laws of Florida upon the later of (i) filing of these Articles of Merger with
the Secretary of State of the State of Florida and the Secretary of State of the
State of Delaware; or (ii) December 1, 1997 (the "Effective Date"). Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Delaware pursuant to the provisions of Sections 607.1101-607.1107 of
the Florida Business Corporation Act (the "Florida Act") and the laws of the
State of Delaware ("Delaware Law").
1.7 Further Assurances. After the Closing, the parties hereto shall execute
and deliver such additional documents and take such additional actions as may
reasonably be deemed necessary or advisable by any party in order to consummate
the transactions contemplated by this Agreement and by the Merger Agreement, and
to vest more fully in Outback the ownership of and the rights to the business
and assets of ARG as existed immediately before the Effective Date.
1.8 Certificates. As soon as practicable after the Effective Date, OSI
shall make available and each holder of capital stock of ARG shall be entitled
to receive upon surrender of stock certificates of ARG representing ARG capital
stock for cancellation, certificates representing the number of shares of OSI
Common Stock into which such shares are converted in the Merger as provided in
SECTION 1.1 hereof. The OSI Common Stock into which such ARG capital stock is
converted shall be deemed issued at the Effective Date.
1.9 Closing of Transfer Books. At the Closing Date, the stock transfer
books of ARG shall be closed and no transfer of capital stock of ARG, shall
thereafter be made.
1.10 Fractional Shares. No fractional shares of OSI Common Stock and no
certificates or scrip therefor shall be issued. Instead, one whole share of OSI
Common Stock shall be issued for each fractional share of .5 or more of one
whole share and each fractional share of less than .5 of one whole share shall
be disregarded.
1.11 Accounting Treatment. It is the intention of the parties hereto that
the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ARG AND AARON
Each of ARG and Aaron, jointly and severally, represent and warrant to OSI
and Outback as follows:
2.1 Organization and Good Standing. ARG is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
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2.2 Power and Authority. ARG has the requisite power and authority and all
material licenses and permits required by governmental authorities to own, lease
and operate its properties and assets and to carry on its businesses as
currently being conducted.
2.3 Authority and Validity.
(a) ARG has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Merger Agreement and the
other documents executed or to be executed by ARG in connection with this
Agreement; and the execution, delivery and performance by ARG of this
Agreement, the Merger Agreement and the other documents executed or to be
executed by ARG in connection with this Agreement have been duly authorized
by all necessary corporate action. The execution, delivery and performance
by ARG of this Agreement, the Merger Agreement and any other documents
executed or to be executed in connection with this Agreement and the
consummation of the transactions provided for herein have been duly
authorized and approved by the board of directors and shareholders of ARG
as required under the laws of the State of Delaware and ARG's corporate
governance documents.
(b) Aaron has the power and authority to execute, deliver and perform
his obligations under this Agreement and the other documents executed or to
be executed by Aaron in connection with this Agreement.
2.4 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by ARG and Aaron in connection with this
Agreement have been or will have been duly executed and delivered by ARG and
Aaron, and are or will be, when executed and delivered, the legal, valid and
binding obligations of each of ARG and Aaron enforceable in accordance with
their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
2.5 Compliance with Other Instruments. Neither the execution and delivery
by ARG nor Aaron of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of ARG or
Aaron pursuant to, its certificate of incorporation, bylaws, partnership
agreement, operating agreement or other charter or governance document, or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument (including with customers),
judgment, order, injunction or decree by which ARG or Aaron is bound, to which
either of them is a party, or to which any assets of either of them are subject;
provided, however, this SECTION 2.5 shall not apply with respect to any of the
foregoing if ARG is bound thereby, a party thereto, or its assets subject,
solely by reason of its status as a partner in the Partnership.
2.6 Capitalization of ARG.
(a) The authorized capital stock of ARG consists of One Thousand
(1,000) common shares. There are one hundred (100) common shares issued and
outstanding, all of which are
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owned by Aaron. There are no other shareholders of ARG and no other persons
with rights or options to acquire capital stock of ARG. All of the issued
and outstanding shares of capital stock of ARG have been duly authorized
and validly issued and are fully paid and nonassessable. There are no
shares of capital stock of ARG held in its treasury.
(b) There are no voting trusts, shareholder agreements or other voting
arrangements to which the shareholder of ARG is a party.
(c) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating ARG
to issue, sell, exchange or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or
exchangeable for, capital stock of ARG.
2.7 Absence of Certain Changes. From December 31, 1996 to the Closing Date,
(except solely as a result of ARG's status as a partner in the Partnership) ARG
has not:
(a) suffered any material adverse change in its business, results of
operations, working capital, assets, liabilities, or condition (financial
or otherwise) or the manner of conducting its business;
(b) suffered any material damage or destruction to or loss of its
assets not covered by insurance, or any loss of suppliers or employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material amount
of assets to any lien, claim or encumbrance of any kind, except in the
ordinary course of business or pursuant to agreements in force at the date
of this Agreement and identified in Item 2.7(c) of the Disclosure
Schedules;
(d) forgiven, compromised, canceled, released, waived or permitted to
lapse any material rights or claims;
(e) entered into or terminated any lease, agreement, commitment or
transaction, or agreed to or made any changes in any leases or agreements,
other than transactions and commitments entered into in the ordinary course
of business;
(f) written up, written down or written off the book value of any
assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or
agreed to changes in the terms and conditions of any such rights
outstanding as of the date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or
contributed to any employee benefit plan;
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(j) entered into any employment, consulting, compensation or
collective bargaining agreement with any person or group, except oral
employment agreements which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan or
severance agreements.
2.8 Tax Liabilities. ARG has filed all federal, state, county, local and
foreign tax returns and reports required to be filed by them by the date hereof,
including those with respect to income, payroll, property, withholding, social
security, unemployment, franchise, excise and sales taxes; ARG has either paid
in full all taxes that have become due as reflected on any return or report and
any interest and penalties with respect thereto or have fully accrued on their
books or have established adequate reserves for all taxes payable but not yet
due; and have made cash deposits with appropriate governmental authorities
representing estimated payments of taxes, including income taxes and employee
withholding tax obligations. No extension or waiver of any statute of
limitations or time within which to file any return has been granted to ARG with
respect to any tax. No unsatisfied deficiency, delinquency or default for any
tax, assessment or governmental charge has been claimed, proposed or assessed
against ARG nor has ARG received notice of any such deficiency, delinquency or
default. ARG has no reason to believe that ARG has or may have any tax
liabilities other than those reflected on the unaudited balance sheet of ARG as
of December 1, 1997, with any notes thereto, and the related unaudited
statements of income for the twelve months ended December 1, 1997, together with
supplemental information on ARG, each prepared and attested to by the chief
financial officer of ARG (the "Balance Sheets") and those arising in the
ordinary course of business since the date thereof. With regard to the
foregoing, ARG has relied on the accuracy and completeness of the Schedule K-1
provided by the Partnership.
Aaron shall have sole responsibility for filing all required tax returns
for ARG. OSI shall assist Aaron in preparing income tax returns and shall
cooperate with Aaron to the extent necessary therefor, and Aaron shall provide
OSI with copies of all such returns at least fifteen (15) days prior to filing.
2.9 No Undisclosed Liabilities. There are no liabilities or obligations of
ARG (other than material liabilities arising solely by reason of ARG's status as
a partner in the Partnership) of any nature, whether absolute, accrued,
contingent or otherwise, other than liabilities or obligations indicated in
Items 2.9(a) and 2.9(b) of the Disclosure Schedules.
2.10 Title to Properties. ARG has good and marketable title to the assets
reflected in its books and records as being owned by it, (except as they have
since been affected by transactions in the ordinary course of business and
consistent with past practices) the real and personal properties reflected in
the Balance Sheets (except for assets subject to financing leases required to be
capitalized under generally accepted accounting principles, all of which are so
reflected in the Balance Sheet or notes thereto) and all assets purchased by ARG
since the date of the Balance Sheet, in each case free and clear of any lien,
claim or encumbrance, except as reflected in the Balance Sheet or notes thereto
and in Item 2.10 of the Disclosure Schedule and except for liens for taxes,
assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets, all
material properties and assets owned by ARG are properly reflected on the
applicable Balance Sheets and notes thereto.
2.11 Contracts. Excluding (i) contracts and commitments between Outback or
OSI and ARG or the Partnership, (ii) contracts and commitments entered into by
the Partnership to which Outback or OSI is a party, (iii) contracts and
commitments entered into by ARG in the ordinary course of the Partnership's
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business without violation of the provisions of the Partnership Agreement, and
(iv) contracts and commitments entered into with the written consent of OSI or
Outback, Item 2.11 of the Disclosure Schedule is a complete and accurate list of
all of the contracts and commitments (including summaries of oral contracts) to
which ARG is a party or by which ARG is bound:
2.12 Litigation and Government Claims. Except as indicated in Item 2.12 of
the Disclosure Schedule, there is no pending suit, claim, action or litigation
or administrative, arbitration or other proceeding or governmental investigation
or inquiry against ARG or the Partnership or to which any of their business or
assets is subject. Except as indicated in Item 2.12 of the Disclosure Schedule,
there are no such proceedings threatened or, to the best knowledge of ARG or
Aaron, contemplated or, to the best knowledge of ARG or Aaron, any basis for any
unasserted claims (whether or not the potential claimant may be aware of the
claim) of any nature that might be asserted against ARG or the Partnership.
2.13 No Violation of Any Instrument. Except as indicated in Item 2.13 of
the Disclosure Schedule, ARG is not in violation of or default under nor has any
event occurred that, with the lapse of time or the giving of notice or both,
would constitute a violation of or default under or permit the termination or
the acceleration of maturity of or result in the imposition of a lien, claim or
encumbrance upon any property or asset of ARG pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of ARG or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by ARG in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
customers), judgment, order, injunction or decree to which ARG is a party, by
which ARG is bound or to which any of the assets of ARG are subject.
2.14 Necessary Approvals and Consents. Other than (a) in connection with or
in compliance with the laws of the States of Florida and Delaware with respect
to effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities, (c) consents required to be obtained from lessors,
and (d) under the provisions of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of ARG and Aaron of this Agreement, the Merger Agreement and the other
agreements executed or to be executed by them in connection with this Agreement,
and the consummation by ARG and Aaron of the transactions contemplated by this
Agreement and the Merger Agreement, and the ownership and operation by Outback
of the respective businesses and properties of ARG after the Effective Date in
substantially the same manner as now operated.
2.15 Compliance With Laws. Aaron has no actual knowledge that ARG or the
Partnership are not in compliance with any such laws applicable to their
respective business, where failure to so comply would have a material adverse
effect on their business, operations, properties, assets or conditions.
2.16 Accuracy of Information Furnished. No representation or warranty by
ARG or Aaron in this Agreement nor any information in the Financial Statements
or in the Disclosure Schedule contains any untrue statement of a material fact
or omits to state any material fact that would make the statements herein or
therein, in light of the circumstances under which they were made, false or
misleading. Each of ARG and Aaron have disclosed to OSI and Outback all facts
known to them that are material to ARG's and the Partnership's respective
businesses, operations, financial condition or prospects.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AARON
In addition to the representations and warranties contained in ARTICLE 2,
Aaron represents and warrants to OSI and Outback as follows:
3.1 Authority and Validity. He has the capacity and authority to execute,
deliver and perform this Agreement and all other agreements and documents he is
executing or will execute in connection herewith or therewith.
3.2 Binding Effect. This Agreement and the other documents executed or to
be executed by Aaron in connection with this Agreement have been or will have
been duly executed and delivered by him and are or will be, when executed and
delivered, his legal, valid and binding obligations enforceable in accordance
with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
3.3 Ownership. Aaron is the sole record and beneficial shareholder of ARG
and no other person has any rights (in any form) to acquire any capital stock of
ARG.
3.4 Voting. He acknowledges that in his individual capacity as shareholder
and director of ARG, he has voted in favor of the execution and delivery of this
Agreement and the Merger Agreement.
3.5 Residency. Aaron is, and has been at all times during the one year
period ending on the date hereof, a resident of the State of Pennsylvania.
3.6 Compliance with Other Instruments. Neither the execution and delivery
by Aaron of this Agreement and the Merger Agreement, nor the consummation by him
of the transactions contemplated hereby and thereby will violate, breach, be in
conflict with or constitute a default under or permit the termination or the
acceleration of maturity of or result in the imposition of any lien, claim or
encumbrance upon any material property or asset of Aaron pursuant to any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other agreement or instrument (including with customers),
judgment order, injunction or decree by which Aaron is bound, to which he is a
party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to ARG and
Aaron as follows:
4.1 Organization and Good Standing. OSI and Outback are corporations duly
organized, validly existing and in good standing under the laws of the States of
Delaware and Florida, respectively.
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4.2 Foreign Qualification. Outback is duly qualified or licensed to do
business and in good standing as a foreign corporation in Delaware and in every
other jurisdiction where the failure to so qualify could have a material adverse
effect on its respective business, operations, assets or financial condition.
4.3 Power and Authority. OSI and Outback each have the corporate power and
authority and all licenses and permits required by governmental authorities to
own, lease and operate their respective properties and assets and to carry on
their respective business as currently being conducted.
4.4 Authority and Validity. OSI and Outback each have the corporate power
and authority to execute, deliver and perform their respective obligations under
this Agreement, the Merger Agreement and the other documents executed or to be
executed by OSI and Outback in connection with this Agreement and the execution,
delivery and performance by OSI and Outback of this Agreement, the Merger
Agreement and the other documents executed or to be executed by OSI and Outback
in connection with this Agreement have been duly authorized by all necessary
corporate action.
4.5 Binding Effect. This Agreement, the Merger Agreement and the other
documents executed or to be executed by OSI and Outback in connection with this
Agreement have been or will have been duly executed and delivered by OSI and
Outback and are or will be, when executed and delivered, the legal, valid and
binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
4.6 Compliance with Other Instruments. Neither the execution and delivery
by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 Capitalization of OSI. The authorized capital stock of OSI consists of
Two Hundred Million (200,000,000) shares of Common Stock, $.01 par value and Two
Million (2,000,000) shares of Preferred Stock, $.01 par value, of which
approximately 47,824,233 shares of Common Stock and no shares of Preferred Stock
were issued and outstanding as of November 11, 1997. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for ARG's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, except for (i) employee and director stock
options to acquire shares of OSI Common Stock and (ii) employee stock ownership
plans, there are no options, warrants or other rights, agreements or commitments
outstanding obligating Outback or OSI to issue shares of its capital stock. All
of the outstanding shares of capital stock of Outback are owned by OSI, free and
clear of any lien or encumbrance.
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4.8 SEC Reports. OSI has delivered to ARG and Aaron true and complete
copies of its (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Proxy Statement used in connection with its 1997 Annual Meeting of
Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all periodic
reports, if any, on Form 8-K filed with the Securities and Exchange Commission
since December 31, 1996 to the date hereof; and (v) all Forms 10-Q, if any,
filed with the Securities and Exchange Commission since December 31, 1996, to
the date hereof. Such documents and reports did not on their dates or the date
of filing, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. OSI has filed all material documents required to be filed by it with
the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to ARG and Aaron. All financial statements and schedules included in
the documents referred to in this SECTION 4.8 were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis except
as noted therein and fairly present the information purported to be shown
therein.
4.9 Litigation and Government Claims. There is no pending suit, claim,
action or litigation or administrative, arbitration or other proceeding or
governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 Necessary Approvals and Consents. Other than (a) in connection with or
in compliance with the laws of the States of Florida and Delaware with respect
to effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities and (c) consents required to be obtained from
lessors, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
OSI and Outback of this Agreement, the Merger Agreement and the other agreements
executed or to be executed by either of them in connection with this Agreement
and the consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 Absence of Certain Changes or Events. Except as disclosed in public
filings by OSI with the Securities and Exchange Commission prior to the date
hereof and the Closing Date, since December 31, 1996, there has not been any
material adverse change in the financial condition, results of operations or the
business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF ARG, AARON, OSI AND OUTBACK
ARG and Aaron, jointly and severally, on the one hand, and OSI and Outback,
jointly and severally on the other hand, covenant with each other as follows:
5.1 Notice of any Material Change. Until the Effective Date, each of ARG,
Aaron, OSI and Outback shall, promptly after the first notice or occurrence
thereof but prior to the Effective Date, advise the others in writing of any
event or the existence of any state of facts that:
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(a) would make any of its representations and warranties in this
Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in the
business, results of operation, working capital, assets, liabilities or
condition (financial or otherwise) of OSI, Outback or ARG and their
respective subsidiaries, taken as a whole. No supplement or amendment to
any Disclosure Schedule shall have any effect for the purpose of
determining the satisfaction of or compliance with the conditions to the
obligations of the parties to consummate the Merger set forth elsewhere in
this Agreement.
5.2 Cooperation. Until the Effective Date, each of the parties hereto shall
and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date
and, in any event, before the Closing Date, the approvals, authorizations
and consents necessary to consummate the transactions contemplated by this
Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other parties may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its
control, all conditions precedent to the obligations to close this
Agreement.
5.3 Post-Closing Adjustment. As soon as practicable after the Effective
Date, but in no event more than forty-five (45) days thereafter, OSI shall
determine and report in writing to all parties hereto:
(a) the amount of current assets of ARG as of the Effective Date;
(b) the amount of all liabilities of ARG (other than liabilities
specified in Item 6.2 of the ARG Disclosure Schedule to the extent assumed
by Outback) which were not paid in full prior to the Effective Date;
(c) the estimated amount of all federal and state taxes, including,
but not limited to, federal and state income taxes, payable by ARG for the
short tax year ending on the Effective Date;
Upon receipt of such report, Aaron (by notice to OSI as provided herein)
shall have a period of ten (10) days in which to object in writing to any
portion or item of such report. In the event no objection is timely made, OSI's
report shall be final and binding on all parties. If timely objection is made,
the chief financial officer of OSI and Aaron (and at the expense of Aaron) shall
meet and attempt to agree on the items to which objection was made. If such
persons cannot agree within thirty (30) days from the date of written objection,
the items on which agreement has not been reached shall be submitted to the
Tampa, Florida office of Price Waterhouse (or other agreed upon independent "Big
Six" accounting firm) for a resolution of such items and whose decision shall be
final and binding on all parties. The fees and expenses of Price Waterhouse (or
other accounting firm) shall be paid by the non-prevailing party.
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If, as finally determined, the sum of Subsection (a) above exceeds the sum
of Subsections (b) and (c), OSI shall pay such excess to Aaron within ten (10)
days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Aaron shall pay such
excess to OSI within ten (10) days of the final determination.
5.4 Distribution and Allocations. The parties acknowledge and agree that
notwithstanding the effective date of the Merger, Outback shall be entitled to
ARG's entire share of Partnership distributions of cash flow, and shall be
allocated ARG's shares of profit and loss, from and after December 1, 1997.
5.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take or cause to be
taken, all actions and to do or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings and to lift
any injunction or other legal bar to the Merger (and, in such case, to
proceed with the Merger as expeditiously as possible), subject, however, to
the appropriate vote of the shareholders of ARG.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the
proper officers and/or directors of OSI and Outback and Aaron shall take
all such necessary action.
(c) Neither Outback, OSI, ARG nor Aaron shall take any action which
would jeopardize the characterization of the Merger as a reorganization
within the meaning of Section 368(a) of the Code or the treatment of the
Merger for financial reporting purposes as a pooling of interests.
ARTICLE 6
COVENANTS OF ARG AND AARON
ARG and Aaron covenant and agree with OSI as follows:
6.1 Securities Law Compliance. Aaron represents and warrants, and covenants
to Outback and OSI that:
(a) Aaron has received all schedules and exhibits and the documents
furnished to ARG pursuant to SECTION 4.8;
(b) Aaron has had the opportunity to ask questions of and receive
answers from representatives of the management of OSI concerning the terms
and conditions of the transactions contemplated hereby and to obtain all
additional information that OSI possesses or could acquire without
unreasonable expense that is necessary to verify the accuracy of
information furnished to Aaron.
(c) OSI and Outback have furnished him with all information requested
and full access to materials concerning OSI and Outback which the Aaron
and/or his advisors deemed necessary to properly evaluate the Merger. Such
information and access have been made available and
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<PAGE> 17
utilized to the extent Aaron considers necessary and advisable in making an
informed investment decision, and Aaron has consulted his own tax advisor
and understands the evaluation of such materials may require the assistance
of experts and Aaron has utilized such experts to the extent deemed
necessary.
(d) Aaron understands that the OSI Common Stock to be received is an
investment of a speculative nature and Aaron must bear the risks thereof
for an indefinite period of time. Aaron has adequate means for providing
for his needs, is able to bear the economic risk of the investment and has
no need for liquidity in the OSI Common Stock to be received in the Merger.
(e) Aaron and/or his representatives or advisors who have acted with
or on behalf of Aaron and who have advised Aaron in this matter have such
knowledge and experience in financial and business matters that Aaron is
capable of evaluating the merits and risks of the Merger for OSI Common
Stock.
(f) Aaron is participating in the Merger solely for his account as a
private investment, and Aaron has no present agreement, understanding,
arrangement or intention to sell or transfer all or any portion of the
shares of OSI Common Stock to be issued in the Merger to any other person
or persons. Aaron does not presently intend to enter into any such
agreement or undertaking and there are no present circumstances which will
compel Aaron to sell any OSI Common Stock so received. Aaron will not sell
or otherwise transfer the shares (except for de minimis gifts of shares)
unless they are registered under the Securities Act and applicable state
securities laws or, in the opinion of OSI and its counsel, an exemption
from registration is available therefor.
(g) The investment by Aaron in OSI Common Stock pursuant to the Merger
is a suitable investment for Aaron given the investment goals and
objectives of Aaron.
(h) Aaron agrees to indemnify and hold OSI and Outback and each of
their respective officers, directors and advisors harmless against all
liability arising out of or in connection with any purchase, resale or
distribution by Aaron of any OSI Common Stock received hereby which is
effected other than in strict compliance with the terms hereof and
applicable law.
(i) Aaron understands that the shares of OSI Common Stock to be issued
in the Merger will not be registered under the Securities Act, nor any
state securities laws, and such OSI Common Stock may not be sold or
transferred except in compliance with such laws. Neither OSI nor Outback
will have any obligation to register any OSI Common Stock hereof.
(j) Aaron understands that OSI will place an appropriate legend on the
certificate representing OSI Common Stock to be received restricting the
transfer of the shares and stop-transfer instructions will be given to the
transfer agent for the OSI Common Stock with respect to such certificates.
(k) Aaron is a natural person (i) whose net worth (the excess of total
assets over total liabilities), individually or jointly with his spouse,
exceeds $1,000,000 (inclusive of the value of home, home furnishings and
automobiles); or (ii) who had an Individual Annual Adjusted Gross Income in
excess of $200,000 in each of the two most recent tax years or joint income
with Aaron's spouse in excess of $300,000 in each of those years and
reasonably expects to reach the same income level in the current tax year.
13
<PAGE> 18
6.2 Payment of Liabilities. ARG and Aaron covenant and agree that all debts
and liabilities of ARG relating to periods prior to the Closing Date shall be
paid or satisfied in full prior to the Effective Date, except only current
liabilities and those debts and liabilities of ARG assumed by Outback as
specified in Item 6.2 of the Disclosure Schedules.
6.3 Pooling. Aaron agrees that until such time as financial results of OSI
covering at least thirty (30) days of combined operations of OSI and ARG
subsequent to the Effective Date have been published, he will not sell or
otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with ARG and
Aaron as follows:
7.1 Employment Agreements. Solely with respect to the Merger, and any
consequential termination of any partnership by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between the Partnership, as
employer, and the general managers of the Partnership's Outback Steakhouse(R)
restaurants, as employees. Outback shall succeed to all rights and obligations
of the Partnership under such Employment Agreements. Nothing contained herein
shall be construed as in any way limiting Outback's right to terminate any such
Employment Agreement as a result of any circumstance or event other than the
Merger and consequential termination of the Partnership by operation of law.
7.2 Assumed Liabilities. OSI and Outback agree to assume and pay the
liabilities specified in Item 6.2 (subject to the amount limits specified in
Item 6.2 of the Disclosure Schedules) and to indemnify and hold harmless Aaron
from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of ARG, Aaron, OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 Consents to Transaction. ARG, Outback and OSI shall have received all
consents or approvals and made all applications, requests, notices and filings
with, any person, governmental authority or governmental agency required to be
obtained or made in connection with the consummation of the transactions
contemplated by this Agreement. There shall have been obtained from all state
and local governments and governmental agencies all approvals and consents
necessary to enable ARG and/or the Partnership, as applicable, to transfer their
liquor licenses and permits to Outback, to enable Outback to assume such
licenses and permits or to enable Outback to operate restaurants (of the kind
and quality
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<PAGE> 19
customarily operated by Outback) using such permits or licenses. Copies of all
consents and approvals received by any party pursuant to this SECTION 8.1 shall
be furnished to the other party.
8.2 Absence of Litigation. No governmental agency or authority shall have
instituted or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and no order, judgment or decree by
any court or governmental agency or authority shall be in effect that enjoins,
restrains or prohibits the same or otherwise would materially interfere with the
operation of the assets and business of ARG or the Partnership or OSI and its
subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
8.3 Dissenter's Rights. The number of shares of capital stock of ARG for
which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.11 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF ARG
The obligations of ARG and Aaron to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
9.1 Compliance. OSI and Outback shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
OSI and Outback on or before the Closing Date.
9.2 Representations and Warranties. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to ARG and Aaron pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
9.3 Material Adverse Changes. Since the date hereof, there shall have
occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of OSI
and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
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<PAGE> 20
10.1 Compliance. ARG and Aaron shall have or shall have caused to be
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
any of them on or before the Closing Date.
10.2 Representations and Warranties. All of the representations and
warranties made by ARG and/or Aaron in this Agreement, the Disclosure Schedule,
and in all certificates and other documents delivered by ARG or Aaron pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
10.3 Current Financial Status. OSI shall have received the unaudited
financial statements of ARG as of December 31, 1996, for the month then ended.
10.4 Material Adverse Changes. Since December 31, 1996, there shall have
occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of ARG
or the Partnership.
10.5 Pooling. OSI shall have received a letter from Deloitte & Touche, in
form and substance satisfactory to OSI and dated not more than five days prior
to the Closing Date, to the effect that the Merger shall qualify as a pooling of
interests for financial reporting purposes.
ARTICLE 11
INDEMNIFICATION
Aaron, on the one hand, and OSI and Outback, jointly and severally, on the
other hand, agree as follows:
11.1 Indemnification Based on Agreement. Subject to the limitations
contained in SECTION 11.2 hereof, Aaron shall indemnify and hold harmless OSI,
Outback and ARG, and OSI, Outback and ARG, jointly and severally, shall
indemnify and hold harmless Aaron, against any losses, claims, damages or
liabilities to which such indemnified party may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any facts or circumstances that would constitute a breach
by the other of any representation, warranty or covenant contained herein or in
any agreement executed pursuant hereto and will reimburse any legal or other
expenses reasonably incurred by any indemnified party in connection with
investigating or defending any such loss, claim, damage, liability or action.
In addition to the above, Aaron shall indemnify OSI, Outback and ARG, as
provided in the first paragraph of this SECTION 11.1, against any loss, claim,
damage or liability arising out of (i) any tax liability of ARG for any period
prior to and including December 31, 1997 and (ii) any debt of ARG (other than
the debts specified in Item 6.2 of the Disclosure Schedule to the extent assumed
by Outback), and (iii) all claims, obligations, causes of action and
liabilities, of whatever kind or character, of any of ARG which arise out of or
are based upon events first occurring on or before the Effective Date, except
only the liabilities assumed by Outback as specified in Item 6.2 of the
Disclosure Schedule.
11.2 Limitation. Aaron shall have no obligation under SECTION 11.1 to
indemnify OSI, Outback or ARG for any liability, loss, claim or damage arising
out of or based upon facts or actions first occurring after the Effective Date.
All obligations of indemnity (other than those relating to tax obligations of
ARG
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<PAGE> 21
under SECTION 11.1 above which shall continue for the period specified in
SECTION 12.4(B) hereof) shall terminate two (2) years from the Closing Date;
provided, however, the obligations of indemnity shall not terminate with respect
to any matter for which indemnification is claimed within two (2) years from the
Closing Date.
11.3 Cooperation. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 Notice. An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of service
or summons to appear in any action begun in respect of which indemnity may be
sought hereunder. Failure to so notify the indemnifying party or parties shall
cause the indemnified party to be liable for any damage caused by failure to
give timely notice. The indemnifying party or parties may participate at their
own expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after receipt of
such notice, they may assume the defense of such action with counsel chosen by
the indemnifying party or parties and approved by the indemnified party in such
action, unless the indemnified party reasonably objects to such assumption on
the ground that its counsel has advised it that there may be legal defenses
available to it that are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party shall have
the right to employ counsel approved by the indemnifying party or parties. If
the indemnifying party or parties assume the defense of such action, the
indemnifying party or parties shall not be liable for fees and expenses of
counsel for the indemnified party incurred thereafter in connection with such
action. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel for the indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances
unless, in the reasonable opinion of such counsel, there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 Termination. This Agreement and the transactions contemplated hereby
may be terminated at any time on or before the Closing Date (notwithstanding
approval by the shareholders of ARG):
(a) by mutual consent of ARG and OSI;
(b) by OSI if there has been a material misrepresentation or breach of
warranty in the representations and warranties of ARG or Aaron set forth
herein or if there has been any material failure on the part of ARG or
Aaron to comply with their obligations hereunder;
(c) by ARG if there has been a material misrepresentation or breach of
warranty in the representations and warranties of OSI or Outback set forth
herein or if there has been any material failure on the part of OSI or
Outback to comply with their obligations hereunder;
(d) by either OSI, ARG or Aaron, if the transactions contemplated by
this Agreement have not been consummated by February 27, 1998, unless such
failure of consummation is due to
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<PAGE> 22
the failure of the terminating party to perform or observe the covenants,
agreements and conditions hereof to be performed or observed by it at or
before the Closing Date;
(e) by either OSI, or ARG if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived by it
at or before the Closing Date; and
(f) by either ARG or OSI if the transactions contemplated hereby
violate any nonappealable final order, decree or judgment of any court or
governmental body or agency having competent jurisdiction.
12.2 Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
12.3 Entire Agreement. This Agreement and the exhibits and Disclosure
Schedule hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 Survival of Representations and Warranties.
(a) The representations, warranties and indemnification obligations of
OSI and Outback contained herein or in any exhibit, certificate, document
or instrument delivered pursuant to this Agreement shall survive the
Closing for a period of two years; provided, however, that the obligations
of OSI and Outback under ARTICLE 7 and ARTICLE 11 hereof shall survive for
the periods provided therein.
(b) Except where otherwise specifically provided in this Agreement,
the representations, warranties and indemnification obligations of Aaron
contained herein or in any exhibit, schedule, certificate, document or
instrument delivered pursuant to this Agreement shall survive the Closing
for a period of three years from the Effective Date; provided, however, the
representations and warranties contained in SECTION 2.7 shall survive the
Closing for a period ending four years after the filing of ARG's federal
income tax return for the period including the Effective Date.
12.5 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 Notices. All notices, demands, requests or other communications that
may be or are required to be given, served or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be mailed by
registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
If to ARG or Aaron: AARON RESTAURANT GROUP, LTD.
1920 Montgomery Avenue
Villa Nova, PA 19085
Attention: Mark Aaron
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<PAGE> 23
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow, General Counsel
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request or communication that is mailed, delivered or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 Successors and Assigns. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 Waiver and Other Action. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
12.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 Headings. All headings and captions in this Agreement are intended
solely for the convenience of the parties and none shall be deemed to affect the
meaning or construction of any provision hereof.
12.12 Construction. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 Jurisdiction and Venue. The parties agree that any action brought by
either party against the other in any court, whether federal or state, shall be
brought within the State of Florida in the judicial circuit in which OSI has its
principal place of business. Each party hereby agrees to submit to the personal
jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
12.14 Enforcement. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon
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<PAGE> 24
expiration or termination, the prevailing party shall be entitled to receive
from the non-prevailing party, in addition to all other remedies, all costs of
such enforcement including, without limitation, attorney's fees and court costs
and including appellate proceedings.
12.15 Further Assurances. Each party covenants and agrees to execute and
deliver, prior to or after the Merger, such further documents as may reasonably
be requested by another party to fully effectuate the transactions provided for
herein.
12.16 Equitable Remedies. The parties hereto acknowledge that a refusal by
a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:_______________________________ By: ___________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By:_______________________________ By: ___________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, Chief Operating
Officer
"ARG"
Attest: AARON RESTAURANT GROUP, LTD.
a Delaware corporation
By:_______________________________ By: ___________________________________
MARK AARON, Secretary MARK AARON, President
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Witness: "AARON"
___________________________________ _____________________________________
MARK AARON
___________________________________
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<PAGE> 26
EXHIBIT A
ARTICLES OF MERGER
THIS AGREEMENT, PLAN AND ARTICLES OF MERGER ("Articles of Merger"), dated
as of December 1, 1997, is entered into by and among AARON RESTAURANT GROUP,
LTD., a Delaware corporation ("ARG"); OUTBACK STEAKHOUSE, INC., a Delaware
corporation ("OSI"); and OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation ("Outback").
W I T N E S E T H:
WHEREAS, ARG is a corporation duly organized and validly existing under the
laws of the State of Delaware, and the authorized and outstanding capital stock
of ARG is as follows:
<TABLE>
<CAPTION>
Authorized Shares Issued
Corporation Capital Stock And Outstanding
----------- ------------- ---------------
<S> <C> <C>
AARON RESTAURANT GROUP, LTD. 1,000 Common Shares 100 Common Shares
</TABLE>
WHEREAS, OSI is a corporation duly organized and validly existing under the
laws of the State of Delaware; and
WHEREAS, OSI is authorized to issue 2,000,000 shares of Preferred Stock,
par value $.01, none of which are outstanding and 200,000,000 shares of Common
Stock, $.01 par value (the "OSI Common Stock"), of which approximately
47,824,233 shares of OSI Common Stock are issued and outstanding as of November
11, 1997; and
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, the respective Boards of Directors of each of ARG, Outback, and
OSI deem it advisable, for the benefit of their respective corporations and
shareholders, that ARG be merged into Outback, with Outback as the surviving
corporation (in its capacity as surviving corporation, Outback is hereinafter
sometimes referred to as the "Surviving Corporation"), pursuant to the
provisions of Sections 607.1101-607.1107 of the Florida Business Corporation Act
(the "Florida Act") and the laws of the State of Delaware ("Delaware Law"), and
have approved these Articles of Merger; and
WHEREAS, the Board of Directors of ARG has directed that these Articles of
Merger be submitted to its voting shareholder for approval and adoption and the
voting shareholder of ARG has approved and adopted these Articles of Merger in
accordance with Delaware Law and the corporate governance documents of ARG by
unanimous written consent dated December 1, 1997; and
WHEREAS, OSI as the sole shareholder of Outback has approved and adopted
these Articles of Merger by written consent on December 1, 1997; and
A-1
<PAGE> 27
WHEREAS, the Agreement and Plan of Reorganization (the "Reorganization
Agreement"), which Outback, OSI, and ARG have entered, contemplates the
execution and delivery of these Articles of Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and for the purpose of prescribing the terms and conditions of
the merger and such other details and provisions as are deemed necessary or
desirable, the parties hereto agree as follows:
1. MERGER. The names of the corporations which propose to merge are AARON
RESTAURANT GROUP, LTD., a Delaware corporation ("ARG"), and OUTBACK STEAKHOUSE
OF FLORIDA, INC. ("Outback"). In accordance with the provisions of the Florida
Act and Delaware Law at the Effective Date (as hereinafter defined), ARG shall
be merged into Outback, and Outback shall be the Surviving Corporation and as
such shall continue to be governed by the laws of the State of Florida. The plan
of merger set forth in these Articles of Merger was duly authorized by each of
Outback and ARG, respectively, by all action required by the laws under which it
was incorporated or organized and by its constituent documents.
2. CONTINUATION OF CORPORATE EXISTENCE. The corporate existence and
identity of Outback, with all its purposes, powers, franchises, privileges,
rights and immunities, shall continue unaffected and unimpaired by the merger
and the corporate existence and identity of ARG with all its purposes, powers,
franchises, privileges, rights and immunities at the Effective Date shall be
merged with and into that of Outback, and Outback as the Surviving Corporation
shall be vested fully therewith, and the separate corporate existence and
identity of ARG shall thereafter cease except to the extent continued by
statute.
3. EFFECTIVE DATE. The merger shall become effective (hereinbefore and
hereinafter called the "Effective Date") upon the later of (i) filing of these
Articles of Merger with the Secretary of State of the State of Florida and the
Secretary of State of the State of Delaware; or (ii) December 1, 1997. Such
Effective Date shall be indicated on Certificates of Merger issued by the
Secretary of State of the State of Florida and by the Secretary of State of the
State of Delaware pursuant to the Florida Act and Delaware Law.
4. CORPORATE GOVERNMENT.
(a) The Certificate of Incorporation of Outback, as in effect on the
Effective Date, shall continue in full force and effect and shall be the
Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of Outback, as in effect as of the Effective Date,
shall continue in full force and effect and shall be the Bylaws of the
Surviving Corporation.
(c) The members of the Board of Directors and the officers of the
Surviving Corporation shall be the persons holding such positions for
Outback as of the Effective Date.
5. CONVERSION OF SHARES. The manner and basis of converting the capital
stock of ARG into OSI Common Stock, subject to SECTION 5(C) below with respect
to fractional shares, shall be as follows:
(a) Each share of ARG common stock which shall be outstanding
immediately prior to the Effective Date shall at the Effective Date, by
virtue of the merger and without any action
A-2
<PAGE> 28
on the part of the holder thereof, be converted into and exchanged for
1,750 shares of OSI Common Stock.
(b) The Outback Capital Stock outstanding immediately prior to the
Effective Date shall be unaffected by the merger.
(c) The stock transfer books of ARG shall be closed as of the close of
business on the Effective Date and no transfer of record of any of its
capital stock shall take place thereafter.
(d) No fractional shares of OSI Common Stock and no certificates or
scrip therefor shall be issued. Instead one whole share of OSI Common Stock
shall be issued to each holder of shares of common stock of the merging
corporations whose fractional share interest is .5 or more of one whole
share; each fraction of less than .5 of one whole share shall be
disregarded.
(e) Notwithstanding the foregoing, the OSI shall not be required to
issue or distribute more than 175,000 shares of OSI Common Stock pursuant
to the merger, less any shares reserved for dissenters' rights, as
described in Article 1 of the Reorganization Agreement.
(f) All of the shares of OSI Common Stock, when delivered pursuant to
the provisions of these Articles of Merger, shall be validly issued, fully
paid and nonassessable.
(g) At the Effective Date, each holder of certificates representing
shares of the common stock of ARG shall thereupon cease to have any rights
with respect to such shares and shall be deemed to be a shareholder of OSI
to the extent of the number of shares of OSI Common Stock to which such
shareholder shall be entitled in accordance with these Articles of Merger;
and shall surrender certificates representing shares of the common stock of
ARG to the OSI, whereupon such holder shall receive a certificate or
certificates for the number of shares of OSI Common Stock to which such
holder is entitled hereunder.
6. RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under the laws of the State of
Florida.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of Outback, and ARG and all property, real, personal and mixed and
all debts due on whatever account, including subscription to shares and all
other chooses in action and every other interest of or belonging or due to
ARG shall be taken and deemed to be transferred or invested in the
Surviving Corporation without further act or deed.
(c) At the Effective Date, the Surviving Corporation shall thenceforth
be responsible and liable for all liabilities and obligations of ARG and
any claim existing or action or proceeding pending by or against ARG or
Outback may be prosecuted as if the merger had not occurred or the
Surviving Corporation may be substituted in its place. Neither the rights
of creditors nor any liens upon the property of ARG or Outback shall be
impaired by the merger.
A-3
<PAGE> 29
7. CONSENT OF SHAREHOLDERS. These Articles of Merger has been adopted by
the shareholders of ARG in accordance with Delaware Law and its corporate
governance documents by unanimous written consent effective as of December 1,
1997. These Articles of Merger has been adopted by the written consent of the
sole shareholder of Outback dated as of December 1, 1997, to the Florida Act.
8. DISSENTING SHAREHOLDERS. If any shareholder of ARG files a written
objection to these Articles of Merger before a vote of the shareholders is taken
hereon and complies with the further provisions of the Florida Act or Delaware
Law, as applicable, he may be paid the fair value of his shares. If any
shareholder of ARG lawfully elects, pursuant to the Florida Act or Delaware Law,
as applicable, to exercise or pursue his right to dissent from any of the
corporate actions referred to in these Articles of Merger with respect to the
shares of common stock of ARG owned by such shareholder (the "Dissenting
Shares"), such shareholder shall be entitled to exercise only those rights
available to him as set forth in the Florida Act or Delaware Law, as applicable,
and, in that event, only in the manner set forth therein. During the period in
which any such shareholder shall be exercising or pursuing any of such
shareholder's rights of dissent as specified in the Florida Act or Delaware Law,
as applicable, such shareholder shall have no other rights pursuant to or
arising from these Articles of Merger.
9. REORGANIZATION AGREEMENT. These Articles of Merger is intended to
supplement the Reorganization Agreement and is not intended to conflict with or
supersede that agreement and, in the event of any conflict, the provisions of
the Reorganization Agreement shall control.
10. COPIES. A copy of these Articles of Merger shall be on file at the
principal place of business of the Surviving Corporation located at 550 North
Reo Street, Suite 200, Tampa, Florida 33609. A copy of these Articles of Merger
will be furnished by the Surviving Corporation, on request and without cost, to
any shareholder of any corporation that is a party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement, Plan and
Articles of Merger as of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:________________________________ By: _______________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, President
A-4
<PAGE> 30
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of ____________, 1997, before me, personally came ROBERT
D. BASHAM and JOSEPH J. KADOW, President and Secretary, respectively, of OUTBACK
STEAKHOUSE, INC., a Delaware corporation, who are personally known to me, and
each being first duly sworn, did depose and say that they executed the foregoing
on behalf of said corporation by order of the Board of Directors of said
corporation.
(NOTARY SEAL) ______________________________________
(Notary Signature)
NOTARY PUBLIC
Commission No. _______________________
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By:______________________________ By: __________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, Chief Operating
Officer
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
On this ______ day of _______________, 1997, before me, personally came
ROBERT D. BASHAM and JOSEPH J. KADOW, Chief Operating Officer and Secretary,
respectively, of OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida corporation, who
are personally known to me, and each being first duly sworn, did depose and say
that they executed the foregoing on behalf of said corporation by order of the
Board of Directors of said corporation.
(NOTARY SEAL) ______________________________________
(Notary Signature)
NOTARY PUBLIC
Commission No. _______________________
A-5
<PAGE> 31
"ARG"
Attest: AARON RESTAURANT GROUP, LTD.
a Delaware corporation
By:____________________________ By: __________________________________
MARK AARON, Secretary MARK AARON, President
STATE OF PENNSYLVANIA )
) ss
COUNTY OF ________________ )
On this ______ day of _________________, 1997, before me, personally came
MARK AARON, President and Secretary, respectively, of AARON RESTAURANT GROUP,
LTD., a Delaware corporation, who are personally known to me, and each being
first duly sworn, did depose and say that they executed the foregoing on behalf
of said corporation by order of the Board of Directors of said corporation.
(NOTARY SEAL) ____________________________________
(Notary Signature)
NOTARY PUBLIC
Commission No. ______________________
A-6
<PAGE> 32
EXHIBIT B
DISCLOSURE SCHEDULES
Item 2.7(c) Any asset acquired or disposed of, or indebtedness
incurred, assumed, guaranteed, endorsed, paid or discharged;
any material amount of assets subjected or permitted to be
subjected to any liability or obligation or to any lien, claim
or encumbrance of any kind, except in the ordinary course of
business or pursuant to agreements in force at the date of
this Agreement and identified below:
None.
Item 2.9(a) Material liabilities or obligations, contingent or otherwise
of the Partnership of any nature:
None.
Item 2.9(b) Liabilities or obligations of ARG (other than material
liabilities arising solely by reason of ARG's status as a
partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise:
None.
Item 2.10 Liens and encumbrances on real and personal property
purchased by ARG or the Partnership since the date of the
Balance Sheet, except for liens for taxes, assessments or
other governmental charges not yet due and payable.
None.
Item 2.11 Contracts and commitments not in the ordinary course of the
Partnership's business.
None.
Item 2.12 Pending suits, claims, actions or litigation or
administrative, arbitration or other proceedings or
governmental investigations or inquiries against ARG or the
Partnership to which any of their business or assets is
subject.
None.
Item 2.13 Violations and defaults of ARG and the Partnership.
None.
Item 6.2 Current liabilities and those debts and liabilities of ARG
agreed to be assumed by Outback:
None.
B-1
<PAGE> 1
EXHIBIT 10.23
CREDIT AGREEMENT
dated as of August 22, 1997
among
OUTBACK STEAKHOUSE, INC., AS BORROWER
OUTBACK STEAKHOUSE OF FLORIDA, INC. and
CARRABBA'S ITALIAN GRILL, INC., AS GUARANTORS
THE LENDERS IDENTIFIED HEREIN, AS LENDERS
and
BARNETT BANK, N.A., AS AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
Definitions
1.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 2
The Facility
2.1 The Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Swing Line Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Non-Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5 Administrative Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3
General Provisions Applicable to the Facility
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Place and Manner of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Sharing of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.6 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Non-Availability of LIBO Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.8 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.9 Requirement of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.10 Prepayment Premium for LIBO Rate Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.11 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.13 Interest Rate Hedges or Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 4
Guaranty
4.1 Guaranty of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Obligations Unconditional. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Waiver of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Limitation of Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 3
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ARTICLE 5
Representations and Warranties
5.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Joint Ventures and Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Fictitious Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11 Contract or Restriction Affecting Credit Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.12 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.13 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.14 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.15 Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.18 No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19 $7.5 Million Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 6
Affirmative Covenants
6.1 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Inspection of Property, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Licenses and Permits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Advice Regarding Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Advice Regarding Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Observe All Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 ERISA Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.14 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.15 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.16 Maximum Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17 Maximum Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.18 Additional Subsidiaries to Become Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
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ARTICLE 7
Negative Covenants
7.1 Additional Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Guaranty of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Extend Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 8
Conditions Precedent
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Conditions Precedent to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Conditions to Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 9
Default
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 10
Agent Provisions
10.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Powers of the Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Exculpatory Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.4 Reliance on Communications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.5 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.6 Default by Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.7 Consent of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.8 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.9 Reimbursement for Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.10 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.11 The Agent in Its Individual Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.12 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.13 The Agent's Right to Purchase Interests of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 11
Miscellaneous
11.1 Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.5 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.6 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
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<TABLE>
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11.7 Liens, Set Off by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.8 Defaulting Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.10 Florida Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.11 Paragraph Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.12 Gender; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.14 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.15 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
<PAGE> 6
EXHIBITS
<TABLE>
<S> <C>
Exhibit 2.1.2 Form of Notice of Borrowing
Exhibit 2.1.4 Form of Notice of Continuation/Conversion
Exhibit 2.1.6 Form of Revolving Promissory Note
Exhibit 6.1 Form of Officer's Certificate For Financial Certification
Exhibit 11.4.2 Form of Assignment Agreement
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.2.33 Facility Commitment Percentages
Schedule 5.16 Pension and Welfare Benefit Plans
Schedule 11.3 Notice Addresses and Facsimile Numbers of Parties
</TABLE>
<PAGE> 7
CREDIT AGREEMENT
This Credit Agreement is made and entered into this 22nd day of
August, 1997, by and among OUTBACK STEAKHOUSE, INC., a Delaware corporation, as
Borrower; OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida corporation, and
CARRABBA'S ITALIAN GRILL, INC., a Florida corporation, as Guarantors; THE
LENDERS identified herein (the "Lenders"); and BARNETT BANK, N.A., a national
banking association, as Agent.
BACKGROUND
a. The Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility in the principal amount of One Hundred
Twenty-Five Million Dollars ($125,000,000.00) to provide funds for working
capital and general corporate purposes, including acquisitions (the
"Facility").
b. The Lenders which are parties hereto are willing to make the
Facility available to the Borrower on the terms and subject to the conditions
set forth herein and in the other Credit Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, and other good and valuable consideration in
hand paid by the parties hereto, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
OPERATIVE PROVISIONS
ARTICLE 1
Definitions
1.1 Background. The parties hereto acknowledge and agree that the
recitals set forth above (the "Background") are true and correct, and the
Background and the instruments referred to therein are incorporated and made a
part of this Agreement.
1.2 Definitions. As used in this Agreement, the following term
shall have the meanings set forth below:
1.2.1 "Administrative Fee" shall have the meaning set forth
in Section 2.5.
1.2.2 "Advance" or "Advances" shall mean loans or advances
of portions of the Facility, individually or collectively, which Advances may
be Prime Rate Advances, Floating LIBO Rate Advances and/or LIBO Rate Advances.
1.2.3 "Affiliate" shall mean, with respect to any party to
this Agreement, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control
<PAGE> 8
with such party. The term "control" means the power to direct the management
and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
1.2.4 "Agent" shall mean Barnett Bank, N.A. (or any
successor thereto) or any successor agent appointed pursuant to Section 10.12.
1.2.5 "Agreement" shall mean this Credit Agreement, as the
same may be amended, supplemented or modified, in writing, from time to time.
1.2.6 "Applicable Margin" shall mean the number of basis
points, at any point in time, determined in accordance with the following
table:
<TABLE>
<CAPTION>
Applicable Margin Leverage Ratio
(measured as of each quarter end)
----------------- ---------------------------------
<S> <C>
50 basis points <0.35:1.00
62.5 basis points >0.35:1.00 and <0.50:1.00
75 basis points >0.50:1.00 and <0.75:1.00
</TABLE>
The Leverage Ratio shall be measured as of the end of each calendar quarter
based upon financial information provided to the Agent by the Borrower in
accordance with the provisions of this Agreement. Changes in the Applicable
Margin shall be effective as of the date upon which the Agent receives the
quarterly or annual financial information disclosing a change in the Leverage
Ratio which results in a change in the Applicable Margin.
1.2.7 "Bankruptcy Code" shall mean the Bankruptcy Code in
Title 11 of the United States Code, as amended, modified, succeeded or replaced
from time to time.
1.2.8 "BBI" shall mean Barnett Banks, Inc., the holding
company of the Agent.
1.2.9 "Borrower" shall mean Outback Steakhouse, Inc., a
Delaware corporation, its successors and assigns.
1.2.10 "Banking Business Day" shall mean any day other than
a Saturday, Sunday or other day on which commercial banks in Jacksonville,
Florida are closed for business.
1.2.11 "Capital Expenditures" shall mean all expenditures of
the Borrower and its Consolidated Subsidiaries which, in accordance with GAAP,
would be classified as capital expenditures.
2.
<PAGE> 9
1.2.12 "Change of Control" shall mean if any "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended [the "Exchange Act"]), other than Chris T.
Sullivan, Robert D. Basham or J. Timothy Gannon, or a group of Persons of which
one or more of the foregoing is/are a part, has become, directly or indirectly,
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by way of merger,
consolidation or otherwise, of 30% or more of the voting power of the voting
stock of the Borrower on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are then currently
convertible or exercisable).
1.2.13 "Closing" is defined in Section 8.1.
1.2.14 "Code" shall mean the Internal Revenue Code of 1986
and the rules and regulations promulgated thereunder, as amended from time to
time.
1.2.15 "Commitments" shall mean, for each Lender, such
Lender's Facility Commitment Percentage of the Facility Committed Amount.
1.2.16 "Consolidated Subsidiary" shall mean at any date any
Subsidiary of the Borrower or other entity, the accounts of which would be
consolidated with those of the Borrower in its consolidated financial
statements as of such date.
1.2.17 "Consolidated Tangible Net Worth" shall mean, at any
date, the sum of the following, all computed and consolidated in accordance
with GAAP, consistently applied: consolidated shareholders' equity of the
Borrower and its Consolidated Subsidiaries, less any treasury stock, goodwill
and any trade names, trademarks, patents, unamortized debt discounts,
non-compete agreements and other intangible assets of the Borrower and its
Consolidated Subsidiaries.
1.2.18 "Credit Documents" shall mean, collectively, this
Agreement, the Note and any other agreements, documents or instruments relating
to the Facility, whether executed prior to, at or after the Closing hereof, as
the same may be amended, supplemented or modified, in writing, from time to
time; and "Credit Document" shall mean any one of the foregoing.
1.2.19 "Credit Parties" shall mean the Borrower and the
Guarantors and "Credit Party" shall mean any one of them.
1.2.20 "Debt to EBITDA Ratio" shall mean the ratio of (i)
the Borrower's total liabilities, including interests of minority partners in
consolidated partnerships, less deferred tax liabilities and subordinated debt,
as disclosed on the balance sheet of Borrower at any particular date, to (ii)
EBITDA, for the preceding twelve-month period, ending on the test date.
3.
<PAGE> 10
1.2.21 "Default" shall mean any event, act or condition
which with notice or lapse of time, or both, would constitute an Event of
Default.
1.2.22 "Defaulting Lender" shall mean, at any time, any
Lender that, (a) has failed to make an Advance or purchase a Participation
Interest required pursuant to the terms of this Agreement (but only for so long
as such Advance is not made or repaid or such Participation Interest is not
purchased or repaid), (b) has failed to pay to the Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Agreement (but only
for so long as such amount has not been repaid) or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency proceeding or to
a receiver, trustee or similar official.
1.2.23 "Dollars" and "$" shall mean dollars in lawful
currency of the United States of America.
1.2.24 "EBITDA" shall mean, for any period, with respect to
the Borrower and its Consolidated Subsidiaries, the sum of (a) Net Income for
such period plus (b) an amount which, in the determination of Net Income for
such period has been deducted for (i) Interest Expense for such period, (ii)
total Federal, state, foreign or other income taxes for such period and (iii)
all depreciation and amortization for such period, all as determined in
accordance with GAAP.
1.2.25 "Eligible Assignee" shall mean (a) any Lender or
Affiliate or subsidiary of a Lender and (b) any other commercial bank,
financial institution, institutional lender or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission) with capital
of at least $400 million and with an office in the United States.
1.2.26 "Environmental Laws" shall mean any of the Water
Pollution Control Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA" or "Superfund Act"), the Superfund Amendments and Reauthorization
Act, the Toxic Substances Control Act, the Clear Air Act, or any similar laws
imposing liability on any person for the generation, storage, impoundment and
disposal, discharge, treatment, release, seepage, emission, transportation or
destruction of any Hazardous Waste or of any garbage, sewage, effluent, smoke,
dust or any other form of pollution (whether or not denominated as a Hazardous
Waste), as the same may be amended from time to time, and any rules,
regulations, or administrative orders thereunder and any state statutes, laws,
rules, regulations or administrative orders addressing the same or similar
subject as the foregoing federal laws.
1.2.27 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.2.28 "Eurodollar Rate Advance" shall mean any Floating
LIBO Rate Advance and/or any LIBO Rate Advance.
4.
<PAGE> 11
1.2.29 "Event of Default" shall mean any of the events or
circumstances specified in Section 9.1, provided that any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.
1.2.30 "Extension of Credit" shall mean, as to any Lender,
the making of a Loan by such Lender (or a participation therein by a Lender).
1.2.31 "Facilities" shall mean the Facility and the $7.5
Million Facility, collectively.
1.2.32 "Facility" shall mean the Advances, collectively.
1.2.33 "Facility Commitment Percentage" shall mean, for each
Lender, the percentage identified as its Facility Commitment Percentage on
SCHEDULE 1.2.33, as such percentage may be modified in connection with any
assignment made in accordance with the provisions of either Section 10.13 or
subsection 11.4.2.
1.2.34 "Facility Committed Amount" shall mean ONE HUNDRED
TWENTY FIVE MILLION DOLLARS ($125,000,000).
1.2.35 "Federal Funds Rate" shall mean for any day the rate
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day and (b) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions as
determined by the Agent.
1.2.36 "Floating LIBO Rate" shall mean a fluctuating rate of
interest per annum equal to the Applicable Margin plus the rate obtained by
dividing (a) the rate of interest per annum at which deposits in Dollars are
offered in the London Interbank Market in an amount substantially equal to the
Floating LIBO Rate Advance and with a term equal to three (3) months, as
appears on the LIBO Rate Reference Page as of 11:00 a.m. (London time) on the
date for which the Floating LIBO Rate is being calculated, by (b) an amount
equal to 1 minus the Floating LIBO Reserve Requirement for such date. If at
least two such offered rates appear on the LIBO Rate Reference Page, the rate
will be the arithmetic mean of such offered rates. The Agent may, in its
discretion, use any other publicly available index or reference rate showing
rates offered for United States dollar deposits in the London Interbank market
as of the applicable date. In addition, the Agent may, in its discretion, use
rate quotations for daily or annual periods in lieu of quotations for
substantially equivalent monthly periods.
5.
<PAGE> 12
1.2.37 "Floating LIBO Rate Advances" shall mean Advances of
portions of the Facility which bear interest at the Floating LIBO Rate.
1.2.38 "Floating LIBO Reserve Requirement" shall mean, for
any Floating LIBO Rate Advance, the rate, expressed as a decimal, at which
reserves (including, without limitation, any marginal, supplemental or
emergency reserves) are required to be maintained by a Lender on the date
for which a Floating LIBO Rate is being calculated, against U.S. dollar
nonpersonal time deposits in the United States with a term equal to ninety (90)
days.
1.2.39 "GAAP" shall mean generally accepted accounting
principles in effect at the time of any determination thereof, consistently
applied.
1.2.40 "Guarantors" shall mean Outback Steakhouse of
Florida, Inc., a Florida corporation, and Carrabba's Italian Grill, Inc., a
Florida corporation, and any other Person which shall, subsequent to the date
of this Agreement, guarantee the obligations of the Borrower under the Credit
Documents as provided in Section 6.18.
1.2.41 "Hazardous Materials" shall mean any hazardous, toxic
or radioactive substance, materials or products as defined under any
Environmental Laws, including, but not limited to, petroleum products, ammonia,
chlorine, derivatives of petroleum products, pesticides, asbestos and
asbestos-containing materials, and polychlorinated biphenyls (PCBs).
1.2.42 "Interest Expense" shall mean, for any period, with
respect to the Borrower and its Consolidated Subsidiaries, all net interest
expense, including the interest component under any capital leases, as
determined in accordance with GAAP.
1.2.43 "Interest Payment Date" shall mean (a) as to Prime
Rate Advances and Floating LIBO Rate Advances, each February 2, May 2, August 2
and November 2 and on the Maturity Date and (b) as to LIBO Rate Advances, on
the last day of each applicable LIBO Interest Period and on the Maturity Date
and in addition where the applicable LIBO Interest Period for a LIBO Rate
Advance is greater than three months, then also on the date three months from
the beginning of the LIBO Interest Period and each three months thereafter.
1.2.44 "Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which may become a
Lender by way of assignment in accordance with the terms hereof, together with
their successors and permitted assigns.
1.2.45 "Leverage Ratio" shall mean the ratio of (i) the
Borrower's total liabilities, including interest of minority partners in
consolidated partnerships, shown on the balance sheet of the Borrower at any
particular date to (ii) the Borrower's Consolidated Tangible Net Worth on such
date.
6.
<PAGE> 13
1.2.46 "LIBO Interest Period" shall mean the period
commencing on the date so specified in the Borrower's notice to the Agent
specifying that the LIBO Rate is to apply to a LIBO Rate Advance and ending on
the date specified in such notice, which (a) ending date shall be one (1), two
(3), three (3), or six (6) months after the commencement date and (b) shall not
be beyond the Maturity Date. If any LIBO Interest Period would end on a date
which is not a Banking Business Day, such LIBO Interest Period shall be
extended to the next succeeding Banking Business Day, unless the next
succeeding Banking Business Day is in the next calendar month, in which case
such LIBO Interest Period shall end on the next preceding Banking Business Day.
1.2.47 "LIBO Rate" shall mean an interest rate per annum
equal to the Applicable Margin plus the rate per annum obtained by dividing (a)
the rate of interest per annum at which deposits in Dollars are offered in the
London Interbank Market as appears on the LIBO Rate Reference Page as of 11:00
a.m. (London time) on the day that is two London Banking Days (as defined
herein) preceding the first Banking Business Day of the LIBO Interest Period,
by (b) an amount equal to 1 minus the LIBO Reserve Percentage for such LIBO
Interest Period. If at least two such offered rates appear on the LIBO Rate
Reference Page, the rate will be the arithmetic mean of such offered rates.
The Agent may, in its discretion, use any other publicly available index or
reference rate showing rates offered for United States dollar deposits in the
London Interbank market as of the applicable date. In addition, the Agent may,
in its discretion, use rate quotations for daily or annual periods in lieu of
quotations for substantially equivalent monthly periods.
1.2.48 "LIBO Rate Advances" shall mean Advances of portions
of the Facility which bear interest at the LIBO Rate.
1.2.49 "LIBO Rate Reference Page" shall mean any of (a) the
Reuters Screen LIBO Page, (b) the Dow Jones Telerate Page 3750 or (c) such
other nationally recognized source, as may from time to time be used by the
Agent in its sole discretion as a reference for determining any applicable LIBO
Rate or Floating LIBO Rate.
1.2.50 "LIBO Reserve Percentage" shall mean, for any LIBO
Rate Advance, the rate, expressed as a decimal, at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained by a Lender two (2) Business Days prior to the
commencement of a LIBO Interest Period against Eurocurrency liabilities having
a term substantially equal to such LIBO Interest Period.
1.2.51 "LIBO Roll-Over Date" shall mean the last day of any
LIBO Interest Period.
1.2.52 "London Banking Day" shall mean each day other than a
Saturday, a Sunday or any holiday on which commercial banks in London, England
are closed for business.
1.2.53 "Maturity Date" shall mean August 22, 2000.
7.
<PAGE> 14
1.2.54 "Net Income" shall mean, for any period, the net
income after taxes for such period of the Borrower and its Consolidated
Subsidiaries, as determined in accordance with GAAP.
1.2.55 "Non-Usage Fee" shall have the meaning set forth in
Section 2.4.
1.2.56 "Note" or "Notes" shall mean the Revolving Promissory
Notes, individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced from time
to time and as evidenced in the form of EXHIBIT 2.1.6.
1.2.57 "Notice of Borrowing" shall mean a request by the
Borrower for an Advance in the form of EXHIBIT 2.1.2.
1.2.58 "Notice of Continuation/Conversion" shall mean a
request by the Borrower to continue (i) an existing Floating LIBO Rate Advance
as a Floating LIBO Rate Advance or (ii) an existing LIBO Rate Advance to a new
LIBO Interest Period or to convert a Eurodollar Rate Advance to a Prime Rate
Advance or a Prime Rate Advance to a Eurodollar Rate Advance, in the form of
EXHIBIT 2.1.4.
1.2.59 "Officers' Certificate" shall mean a certificate, in
form and substance satisfactory to the Agent, signed by the President, a Vice
President, the Chief Financial Officer or the Treasurer of the Borrower,
including, without limitation, an Officer's Certificate in the form attached as
EXHIBIT 6.1.
1.2.60 "Participation Interest" shall mean the Extension of
Credit by a Lender by way of a purchase of a participation in any Advances as
provided in subsection 11.4.3.
1.2.61 "Person" shall mean an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or any other entity or a government or any agency or
political subdivision thereof.
1.2.62 "Prime Based Rate" shall mean a fluctuating rate of
interest per annum equal to the Prime Rate minus one percent (1%).
1.2.63 "Prime Rate" shall mean the rate of interest
announced by BBI from time to time as its prime rate. The Prime Rate is a
reference rate and is not the lowest rate at which Barnett Bank, N.A. will lend
money to customers.
1.2.64 "Prime Rate Advances" shall mean Advances of portions
of the Facility which bear interest at the Prime Based Rate.
1.2.65 "Required Lenders" shall mean Lenders whose aggregate
Credit Exposure (as hereinafter defined) constitutes at least 66 2/3% of the
Credit Exposure of all Lenders at such time; provided, however, that if any
Lender shall be a Defaulting Lender at such time then there shall be excluded
from the determination of Required Lenders the aggregate principal amount of
Credit
8.
<PAGE> 15
Exposure of such Lender at such time. For purposes of the preceding sentence,
the term "Credit Exposure" as applied to each Lender shall mean (a) at any time
prior to the termination of the Commitments, the sum of the Facility Commitment
Percentage of such Lender multiplied by the Facility Committed Amount and (b)
at any time after the termination of the Commitments, the principal balance of
the outstanding Advances of such Lender.
1.2.66 "$7.5 Million Agreement" shall mean that certain
Second Amended and Restated Loan Agreement executed by and between the Borrower
and the Agent dated August 14, 1995, as amended May 30, 1996 and of even date
herewith, relating to the $7.5 Million Facility.
1.2.67 "$7.5 Million Facility" shall mean that certain
revolving line of credit facility in the maximum principal amount of
$7,500,000.00 made available by the Agent to the Borrower, as evidenced by the
$7.5 Million Note and the $7.5 Million Agreement.
1.2.68 "$7.5 Million Note" shall mean that certain Second
Amended and Restated Commercial Promissory Note dated of even date herewith, in
the original principal amount of $7,500,000.00 executed by the Borrower and
delivered to the Agent.
1.2.69 "Subsidiary" shall mean (i) any corporation of which
more than fifty percent (50%) of the outstanding shares of stock of each class
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) is at the time owned by the Borrower or by
one or more of its Subsidiaries, or by the Borrower and one or more of its
Subsidiaries or (ii) any partnership in which the Borrower or one or more of
its Subsidiaries, or the Borrower and one or more of its Subsidiaries own more
than fifty percent (50%) of the capital or profits interest thereof.
1.2.70 "Swing Line Advances" shall mean Advances of portions
of the Swing Line Facility.
1.2.71 "Swing Line Facility" shall mean a $10,000,000.00
portion of the Facility Committed Amount which is accessed directly from the
Borrower's checking account with the Agent to cover the daily cash requirements
of the Borrower.
1.2.72 "Unused Commitment" shall mean, for any period, the
amount by which (a) the then applicable aggregate Facility Committed Amount
exceeds (b) the daily average sum for such period of the outstanding aggregate
principal amount of all Advances (including Swing Line Advances).
1.3 Other Definitional Provisions. All terms defined in or
incorporated into this Agreement shall have the same defined meanings when used
in the other Loan Documents or any certificate or other instrument made or
delivered pursuant hereto unless the context otherwise requires. Any
accounting term used but not defined herein shall have the meaning given to it
under GAAP.
9.
<PAGE> 16
ARTICLE 2
The Facility
2.1 The Facility.
2.1.1 Facility Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to make Advances to
the Borrower, in Dollars, at any time and from time to time, during the period
from and including the Effective Date to but not including the Maturity Date (or
such earlier date if the Facility Committed Amount has been terminated as
provided herein); provided, however, that (i) the aggregate amount of Advances
outstanding shall not exceed the Facility Committed Amount and (ii) with respect
to each individual Lender, the Lender's pro rata share of outstanding Advances
shall not exceed such Lender's Facility Commitment Percentage of the Facility
Committed Amount minus such Lender's Facility Commitment Percentage of any
outstanding Swing Line Advances which such Lender has not then funded pursuant
to Section 2.2. Subject to the terms of this Agreement (including the
provisions of Section 3.3, below), the Borrower may borrow, repay and reborrow
portions of the Facility.
2.1.2 Method for Obtaining Advances Other than Swing Line
Advances. For Advances of portions of the Facility, other than Advances of the
Swing Line by no later than 10:00 a.m. (i) on the requested date of funding of
Advances that will be Prime Rate Advances or Floating LIBO Rate Advances or
(ii) three Banking Business Days prior to the requested date of funding of
Advances that will be LIBO Rate Advances, the Borrower shall submit a written
Notice of Borrowing in the form of EXHIBIT 2.1.2 to the Agent setting forth (A)
the amount of the requested Advance, (B) whether such Advance shall accrue
interest at the Prime Based Rate, the Floating LIBO Rate or the LIBO Rate, (C)
with respect to Advances that will be LIBO Rate Advances, the LIBO Interest
Period applicable thereto and (D) certification that the Borrower has complied
in all respects with Section 8.3;
2.1.3 Funding of Advances. Upon receipt of a Notice of
Borrowing, the Agent shall promptly inform the Lenders as to the terms thereof
by oral, telephonic or written notification by telecopier (a "Notice to
Lenders"). Oral or telephonic notification from the Agent to each Lender shall
be followed by same-day written notification by telecopier to each Lender. The
date that each such oral, telephonic or written notice is given to the Lenders
by the Agent is hereinafter referred to as an "Advance Request Date." Each
Lender shall make its Facility Commitment Percentage of the requested Advances
available to the Agent by (i) by 2:00 p.m., E.S.T., on the Advance Request
Date, if the Notice to Lenders was provided to such Lender by 12:00 Noon,
E.S.T., on the Advance Request Date, or (ii) by 10:00 a.m., E.S.T., on the next
banking day, if the Notice to Lender was provided to such Lender after 12:00
Noon, E.S.T., on the Advance Request Date., by transferring the same via wire
transfer of immediately available funds to the account set forth below, or to
such other account as the Agent may designate to the Lenders in writing. The
amount of the requested
10.
<PAGE> 17
Advances will then be made available to the Borrower by the Agent by crediting
the account of the Borrower maintained with the Agent, to the extent the amount
of such Advances are made available to the Agent. The account into which each
Lender shall transfer such Lender's Facility Commitment Percentage of each
requested Advance is as follows:
Barnett Bank, N.A.
Jacksonville, Florida
ABA #063000047
Attention: Commercial Loan Accounting
Reference: Outback Steakhouse, Inc., Loan No. 04000017808
If Questions: Call (904) 464-5054
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Advances hereunder; provided, however, that
the failure of any Lender to fulfill its obligations hereunder shall not
relieve any other Lender of its obligations hereunder. Unless the Agent shall
have been notified by any Lender prior to the date of any such Advance that
such Lender does not intend to make available to the Agent its portion of the
Advances to be made on such date, the Agent may assume that such Lender has
made such amount available to the Agent on the date of such Advances, and the
Agent in reliance upon such assumption, may (in its sole discretion but without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent, the
Agent shall be able to recover such corresponding amount from such Lender,
together with interest thereon (1) from noon on the date the funds should have
been delivered to the Agent until noon on the second business day thereafter,
at the Federal Funds Rate and (2) from that date until the date that Agent
recovers such amount from such Lender, at the Prime Rate. All such amounts
shall be paid without setoff, deduction, or counterclaim of any kind
whatsoever.
2.1.4 Continuations and Conversions. Subject to the terms
of Section 8.3, the Borrower shall have the option, on any Banking Business
Day, to continue existing Eurodollar Loans for a subsequent Floating LIBO
Interest Period or LIBO Interest Period, as applicable, to convert Prime Rate
Advances into Eurodollar Rate Advances or to convert Eurodollar Rate Advances
into Prime Rate Advances; provided, however, that (i) each such continuation or
conversion must be requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of EXHIBIT 2.1.4, in compliance with the
terms set forth below, (ii) except as provided in Section 3.8, LIBO Rate
Advances may only be continued or converted on the last day of the LIBO
Interest Period applicable thereto, (iii) Eurodollar Rate Advances may not be
continued nor may Prime Rate Advances be converted into Eurodollar Rate
Advances during the existence and continuation of a Default or Event of Default
and (iv) any request to continue a Eurodollar Rate Advance that fails to comply
with the terms hereof or any failure to request a continuation of a Eurodollar
Rate Advance at the end of the applicable Floating LIBO Interest Period or LIBO
Interest Period shall constitute a conversion to a Prime Rate Advance on the
last day of the applicable Interest Period. Each continuation or conversion
must be requested by the Borrower no later than 11:00 a.m. (A) on the date for
a requested conversion of a Eurodollar Rate Advance to a Prime Rate Advance,
the
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requested conversion of a Prime Rate Advance to a Floating LIBO Rate Advance or
the requested continuation of a Floating LIBO Rate Advance (B) three Banking
Business Days prior to the date for a requested continuation of a LIBO Rate
Advance or a requested conversion of a Prime Rate Advance or a Floating LIBO
Rate Advance to a LIBO Rate Advance, in each case pursuant to a written Notice
of Continuation/Conversion submitted to the Agent which shall set forth (x)
whether the Borrower wishes to continue or convert such Advances and (y) if the
request is to continue a LIBO Rate Advance or convert a Prime Rate Advance or a
Floating LIBO Rate Advance to a LIBO Rate Advance, the LIBO Interest Period
applicable thereto.
2.1.5 Minimum Amounts. Each request for a borrowing,
conversion or continuation shall be subject to the requirements that (i) each
LIBO Rate Advance shall be in a minimum amount of $5,000,000.00 and in integral
multiples of $500,000.00 in excess thereof, (ii) each Prime Rate Advance and/or
Floating LIBO Rate Advance shall be in a minimum amount of the lesser of
$1,000,000.00 (and integral multiples of $50,000.00 in excess thereof) or the
remaining amount available under the Facility Committed Amount and (iii) no
more than ten (10) LIBO Rate Advances shall be outstanding hereunder at any one
time. For the purposes of this Section, all LIBO Rate Advances with the same
LIBO Interest Periods shall be considered as one LIBO Rate Advance, but LIBO
Rate Advances with different LIBO Interest Periods, even if they begin on the
same date, shall be considered as separate LIBO Rate Advances.
2.1.6 Notes. The Advances made by each Lender shall be
evidenced by a duly executed promissory note of the Borrower to each applicable
Lender in the face amount of its Facility Commitment Percentage of the Facility
Committed Amount in substantially the form of EXHIBIT 2.1.6.
2.2 Swing Line Advances. Swing Line Advances shall be made
automatically by the Agent as and when the Swing Line Facility is accessed by
Borrower through its operating checking account. Notwithstanding anything
contained in this Agreement or any of the other Credit Documents to the
contrary, all Swing Line Advances shall bear interest at the Floating LIBO
Rate. Until such time as either (i) the Agent, in its capacity as one of the
Lenders, has fully funded its Facility Commitment Percentage of the Facility
Committed Amount or (ii) a Default or Event of Default has occurred, the
Lenders shall not be obligated to fund their respective Facility Commitment
Percentages of Swing Line Advances. At such time as one of the events set
forth in clause (i) and (ii) of the preceding sentence occurs, each Lender
shall pay to the Agent its Facility Commitment Percentage of the Swing Line
Advances outstanding as of 9:30 a.m., E.S.T. (the "Outstanding Swing Line
Amount") on the date of such occurrence upon oral, telephonic or written
notification by telecopier by the Agent of the Outstanding Swing Line Amount (a
"Notice of Amount"). Oral or telephonic notification from the Agent to each
Lender shall be followed by same-day written notification by telecopier to each
Lender. The date that such oral, telephonic or written notice is given to the
Lenders by the Agent is hereinafter referred to as the "Swing Line Request
Date." Each Lender shall deliver to the Agent its respective Facility
Commitment Percentage of such Outstanding Swing Line Amount (i) by 2:00 p.m.,
E.S.T., on the Swing Line Request Date, if the Notice of Amount was provided to
such Lender by 12:00 Noon, E.S.T., on the Swing Line
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Request Date, or (ii) by 10:00 a.m., E.S.T., on the next banking day, if the
Notice of Amount was provided to such Lender after 12:00 Noon, E.S.T., on the
Swing Line Request Date, by transferring the same via wire transfer of
immediately available funds to the account set in Section 2.1(c), above. Until
a Lender, other than the Agent, has become obligated to fund its Facility
Commitment Percentage of Outstanding Swing Line Amount, as above provided, such
Lender's Facility Commitment Percentage of the Outstanding Swing Line Amount
shall not be deemed to be advanced by such Lender for purposes of calculating
such Lender's Facility Commitment Percentage of the Non-Usage Fee, but shall be
deemed to be advanced for purposes of calculating the amount of such Lender's
Commitment which is available for any purpose other than funding such Lender's
Facility Commitment Percentage of outstanding Swing Line Advances pursuant to
this Section 2.2.
2.3 Term. The term of the Facility shall be for a period
beginning with the date hereof and terminating on the Maturity Date, unless
sooner terminated pursuant to the terms of this Agreement.
2.4 Non-Usage Fee. In consideration for making the Facility
available to it, the Borrower shall pay to the Lenders a non-usage fee (the
"Non-Usage Fee") at a daily rate equal to 1/360th of 15 basis points (1/360 X
0.15%) on the Unused Commitment. The Non-Usage Fee shall accrue daily and be
paid to the Agent quarterly, in arrears, on each Interest Payment Date
applicable to Prime Rate Advances commencing November 2, 1997.
2.5 Administrative Fee. In consideration of the Agent agreeing to
act as agent with respect to the Facility, the Borrower shall pay to the Agent
an annual fee for the administration of the Facility (the "Administrative Fee")
as set forth in a separate letter agreement between the Borrower and the Agent.
ARTICLE 3
General Provisions Applicable to the Facility
3.1 Interest.
3.1.1 Interest Rate. All Prime Rate Advances shall accrue
interest at the Prime Based Rate, all Floating LIBO Rate Advances shall accrue
interest at the Floating LIBO Rate and all LIBO Rate Advances shall accrue
interest at the applicable LIBO Rate.
3.1.2 Computation of Interest. Interest shall be
calculated on the daily outstanding balance of each type of Advance. Interest
shall be computed on the basis of a year of 360 days for the actual number of
days elapsed through the actual payment due date. Changes in the Prime Rate
and/or the Floating LIBO Rate shall be effective as of the date of change in
the applicable rate.
3.1.3 Compliance with Usury Laws. Notwithstanding any
provision of this Agreement to the contrary, the parties intend that no
provision of this Agreement or the Credit
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Documents be interpreted, construed, applied, or enforced so as to permit or
require the payment or collection of interest in excess of the maximum rate as
hereafter may be permitted by the law applicable to this transaction (the
"Maximum Permitted Rate"). If, however, any such provision is so interpreted,
construed, applied, or enforced, then the parties intend: (i) that such
provision automatically shall be reformed nunc pro tunc so as to require payment
only of interest at the Maximum Permitted Rate; and (ii) if the holder of any
Note has received interest payments in excess of such Maximum Permitted Rate,
that the amount of such excess be credited nunc pro tunc in reduction of the
principal amount of such Note, together with interest at such Maximum Permitted
Rate. In connection with all calculations to determine the Maximum Permitted
Rate, the parties intend: first, that all charges be excluded to the extent that
they are properly excludable under the usury laws of the State of Florida or the
United States of America, as they from time to time are determined to apply to
this obligation; and, second, that all charges that may be "spread" in the
manner provided by Section 687.03(3), Florida Statutes (1995), or any similar
successor law, be spread in the manner provided by such statute.
3.1.4 Late Charge. If any payment required by this
Agreement or any of the Notes is not paid within ten (10) days after the date
such payment is due, the Borrower shall pay a late charge equal to the greater
of (a) $100.00 or (b) five percent (5%) of the amount of any payment which is
not received by the Agent on or before the tenth (10th) day following the date
such payment is due, to compensate for the loss of use of funds and for the
expense of handling the delinquency, which late charge must be received by the
Agent with the payment then due.
3.1.5 Default Rate of Interest. Upon the occurrence, and
during the continuance, of an Event of Default, the principal of and, to the
extent permitted by law, interest on the outstanding Advances and any other
amounts owing hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand, at a per
annum rate equal to 2% plus the rate which would otherwise be applicable (or if
no rate is applicable, then at the Prime Rate, plus two percent (2%) per
annum).
3.2 Place and Manner of Payments. All payments of principal,
interest, fees, expenses and other amounts to be made by the Borrower or a
Guarantor under this Agreement shall be received not later than 12:00 Noon,
local time, on the date when due, in Dollars and in immediately available
funds, by the Agent at its offices at 101 East Kennedy Boulevard, Tampa,
Florida 33602 or at such other address as the Agent may from time to time
designate in writing. Payments received after such time shall be deemed to
have been received on the next Banking Business Day. The Borrower shall, at the
time it makes any payment under this Agreement, specify to the Agent, the
Advances, fees or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails to specify, or if such
application would be inconsistent with the terms hereof, the Agent shall,
subject to Section 3.4, distribute such payment to the Lenders in such manner
as the Agent may deem appropriate). The Agent will distribute such payments to
the applicable Lenders if any such payment is received prior to 12:00 Noon,
local time.; otherwise the Agent will distribute such payment to the applicable
Lenders on the next succeeding Banking Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a
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<PAGE> 21
Banking Business Day, the due date thereof shall be extended to the next
succeeding Banking Business Day (subject to accrual of interest and fees for the
period of such extension), except that in the case of LIBO Rate Advances, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Banking
Business Day.
3.3 Prepayments.
3.3.1 Voluntary Prepayments. The Borrower shall have the
right to prepay outstanding Advances in whole or in part from time to time
without premium or penalty; provided, however, that (i) LIBO Rate Advances may
only be prepaid on three Banking Business Days' prior written notice to the
Agent and any prepayment of LIBO Rate Advances will be subject to Section 3.10
and (ii) each such partial prepayment of outstanding Advances shall be in the
minimum principal amount of $5,000,000.00 and integral multiples of $500,000.00
in excess thereof.
3.3.2 Mandatory Prepayments.
(a) Facility Committed Amount. If at any time
the sum of the aggregate amount of Advances outstanding exceeds the Facility
Committed Amount, the Borrower shall immediately make a principal payment to
the Agent in the manner and in an amount necessary to be in compliance with
Section 2.1.
(b) Violation of Financial Covenants. In the
event that, following any review date with respect to the financial covenants
set forth in Sections 6.14 through 6.17, below, the Agent shall notify the
Borrower that the Borrower has failed to comply with one or more of such
financial covenants, but that the Lenders, rather than declare that an Event of
Default exists, elect to (i) require a repayment of a portion of the principal
amount of the then outstanding Advances in a stated amount and (ii) limit the
Facility Committed Amount to a stated, reduced amount until compliance with
such financial covenant(s) has been achieved, the Borrower shall immediately
repay the amount of the required principal reduction to the Agent. If the
Borrower fails to make any repayment required by this subsection within ten
(10) Business Days after having received the notice from the Agent described
above, the same shall constitute an Event of Default
3.3.3 Payment in full at Maturity. On the Maturity Date,
the entire outstanding principal balance of all Advances, together with
accrued but unpaid interest and all other sums owing with respect thereto,
shall be due and payable in full, unless accelerated sooner pursuant to the
terms of this Agreement.
3.4 Pro Rata Treatment. Except to the extent otherwise provided
herein, each Advance, each payment or prepayment of principal of any Advance,
each payment of fees (other than the annual Administrative Fee which is to be
retained by the Agent for its own account), each reduction
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<PAGE> 22
of the Facility Committed Amount, and each conversion or continuation of any
Advance, shall (except as otherwise provided in Section 3.8) be allocated pro
rata among the relevant Lenders in accordance with the respective Facility
Commitment Percentages of such Lenders (or, if the Commitments of such Lenders
have expired or been terminated, in accordance with the respective principal
amounts of the outstanding Advances and Participation Interests of such
Lenders); provided that, if any Lender shall have failed to pay its applicable
pro rata share of any Advance, then any amount to which such Lender would
otherwise be entitled pursuant to this Section shall instead be payable to the
Agent until the share of such Advance not funded by such Lender has been repaid;
provided further, that in the event any amount paid to any Lender pursuant to
this Section is rescinded or must otherwise be returned by the Agent, each
Lender shall, upon the request of the Agent, repay to the Agent the amount so
paid to such Lender, with interest for the period commencing on the date such
payment is returned by the Agent until the date the Agent receives such
repayment at a rate per annum equal to, during the period to but excluding the
date two Business Days after such request, the Federal Funds Rate, and
thereafter, the Prime Rate.
3.5 Sharing of Payments. The Lenders agree among themselves that,
except to the extent otherwise provided herein:
(a) All deposits, monies and property of the
Borrower seized by any of the Lenders through the exercise of rights
of setoff or enforcement of liens, shall be applied to the payment of
outstanding amounts due under Credit Documents, before application to
any other indebtedness then owing from the Borrower to such Lender;
(b) In the event that any Lender shall obtain
payment in respect of any Advance, or any other obligation owing to
such Lender under this Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or by any other means, in
excess of its pro rata share of such payment as provided for in this
Agreement, such Lender shall notify the Agent thereof and promptly pay
in cash or purchase from the other Lenders a participation in such
Advance and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that
all Lenders share such payment in accordance with their respective
ratable shares as provided for in this Agreement; and
(c) If payment to a Lender obtained by such
Lender through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or must
otherwise be restored, each Lender which shall have shared the benefit
of such payment shall, by payment in cash or a repurchase of a
participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect
thereto) to each Lender whose payment shall have been rescinded or
otherwise restored.
Except as otherwise expressly provided in this Agreement, if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to this
Agreement on the date when such amount is due, such
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<PAGE> 23
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders under this Section
to share in the benefits of any recovery on such secured claim.
3.6 Capital Adequacy. If, after the date hereof, any Lender has
determined that the adoption or the becoming effective of, or any change in, or
any change by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof in the
interpretation or administration of, any applicable law, rule or regulation
regarding capital adequacy, or compliance by such Lender, or its parent
corporation, with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's (or parent corporation's) capital or assets as a consequence
of its commitments or obligations hereunder to a level below that which such
Lender, or its parent corporation, could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's
(or parent corporation's) policies with respect to capital adequacy), then,
following not less than thirty (30) days prior notice from such Lender to the
Borrower, the Borrower thereafter shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender on an after-tax
basis (after taking into account applicable deductions and credits in respect of
the amount indemnified) for such reduction. Each determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.7 Non-Availability of LIBO Rate. In the event, and on each
occasion, that: (a) on the day two Banking Business Days prior to the
commencement of any LIBO Interest Period, the Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower) that
(i) the LIBO Rate is not available for dollar deposits in an amount
approximately equal to the Advance with respect to which the Borrower requests
that LIBO Rate apply, or (ii) the rate at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to the Lenders of
making or maintaining a LIBO Rate with respect to such Advance during such LIBO
Interest Period, or (iii) reasonable means do not exist for ascertaining a LIBO
Rate, or (iv) a LIBO Rate with respect thereto would be in excess of the
maximum interest rate which the Borrower may by law pay; or (b) on the date
that the Floating LIBO Rate is to become applicable to an Advance, the Agent
shall have determined that (y) reasonable means do not exist for ascertaining
the Floating LIBO Rate, or (z) the Floating LIBO Rate with respect thereto
would be in excess of the maximum interest rate which the Borrower may by law
pay, such Advance shall bear interest at the Prime Based Rate until the
foregoing circumstances no longer apply.
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3.8 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any law or regulation or in the interpretation
or application thereof occurring after the date hereof shall make it unlawful
for any Lender to make or maintain Eurodollar Rate Advances as contemplated by
this Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Agent (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Rate Advances, continue Eurodollar Rate Advances
as such and convert a Prime Rate Advances to Eurodollar Rate Advances shall
forthwith be canceled and, until such time as it shall no longer be unlawful
for such Lender to make or maintain Eurodollar Rate Advances, such Lender shall
then have a commitment only to make a Prime Rate Advance when a Eurodollar Rate
Advance is requested and (c) such Lender's Advances then outstanding as
Eurodollar Rate Advances, if any, shall be converted automatically to Prime
Rate Advances immediately, with respect to Floating LIBO Rate Advances, and on
the respective last days of the then current LIBO Interest Periods, with
respect to LIBO Rate Advances, or within such earlier period as required by
law. If any such conversion of a LIBO Rate Advance occurs on a day which is not
the last day of the LIBO Interest Period applicable thereto, the Borrower shall
pay to such Lender such amounts, if any, as may be required pursuant to Section
3.10.
3.9 Requirement of Law. The Borrower recognizes that the cost to
the Lenders of making or maintaining LIBO Rates with respect to the LIBO Rate
Advances may be, from time to time affected by the matters set forth in
subsections 3.9.1 and 3.9.2, below, and the Borrower agrees that the Lenders, in
quoting or establishing a LIBO Rate at the commencement of a LIBO Interest
Period, may take into consideration such additional amount or amounts resulting
from the following as the Lenders shall determine will compensate the Lenders
for such additional costs:
3.9.1 Reserve Requirements. The imposition of, or changes
in, the reserve requirements promulgated by the Board of Governors of the
Federal Reserve System of the United States, including, but not limited to, any
reserve on Eurocurrency Liabilities, as defined in Regulation D, at the ratios
provided in such Regulation from time to time, it being agreed that any LIBO
Rate Advances shall be deemed to constitute Eurocurrency Liabilities, as
defined by such Regulation, and it being further agreed that such Eurocurrency
Liabilities shall be deemed to be subject to such reserve requirements without
benefit of or credit for prorations, exceptions, or offsets that may be
available to the Lender or BBI from time to time under such Regulation; or
3.9.2 Changes of Law. Any change, after the date of this
Agreement, in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) or by any court changing the basis of taxation of payments to a Lenders of
the principal of or interest on any LIBO Rate Advances or any other fees or
amounts payable under this Agreement (other than taxes imposed on the overall
net income of a Lender by any state, or by any political subdivision or taxing
authority therein), or imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, credit extended by, or any other acquisition of funds for loans by
a Lender or imposing on a Lender or the London Interbank Market
18.
<PAGE> 25
any other condition affecting this Agreement or any LIBO Rate Advances so as to
increase the cost to a Lender of making or maintaining a LIBO Rate with respect
to any LIBO Rate Advance or to reduce the amount of any sum received or
receivable by a Lender under this Agreement (whether of principal, interest or
otherwise), by an amount deemed by the Lender to be material, but without
duplication for payments required under subsection 3.9.1, above.
Notwithstanding the foregoing, once a LIBO Rate has been established for a
particular LIBO Rate Advance, the LIBO Rate so established shall apply, without
increase, during the applicable LIBO Interest Period, notwithstanding the fact
that the cost to a Lender of making or maintaining LIBO Rates may be increased
as a result of an event set forth in subsection 3.9.1 or 3.9.2, above.
3.10 Prepayment Premium for LIBO Rate Advances. With respect to each
such LIBO Rate Advance being prepaid, the Borrower shall pay to the Agent,
contemporaneously with any such prepayment of this Note, an amount equal to the
amount of the prepayment multiplied by a per annum interest rate equal to the
difference between the LIBO Rate applicable thereto, and the 360 day equivalent
interest yield (hereinafter called the "Reinvestment Rate") on any United States
Treasury obligations selected by the Agent in an aggregate amount approximately
equal to the LIBO Rate Advance being prepaid and with maturities comparable to
the LIBO Roll-Over Date applicable thereto, calculated over a period of time
from the date of prepayment to and including such LIBO Roll-Over Date of such
LIBO Rate Advance. If the LIBO Rate on such LIBO Rate Advance being prepaid is
equal to or less than the Reinvestment Rate, no prepayment premium shall be due.
Any payment of LIBO Rate Advances after acceleration of the applicable maturity
date of Facility, or the commencement of any proceedings to enforce Credit
Documents, as a result of the occurrence of an Event of Default, shall be deemed
a voluntary prepayment for the purposes of this paragraph and a prepayment
premium calculated pursuant to the provisions of this paragraph shall be payable
with respect thereto based upon the LIBO Rates applicable to any LIBO Rate
Advances immediately prior to such default and acceleration. Any partial
prepayment of Advances shall be applied first to the payment in full of
outstanding Prime Rate Advances and Floating LIBO Rate Advances, and then in
reduction of the various outstanding LIBO Rate Advances, in such order and
manner so as to minimize the prepayment premium due with respect thereto as
calculated pursuant to the provisions of this paragraph. The Agent shall
certify to the Borrower the amount and basis of determination of such prepayment
premium, it being agreed that (a) the calculation of such prepayment premium may
be based on any United States Treasury obligations selected by the Agent in its
sole discretion and (b) the Lenders shall not be obligated or required to have
actually reinvested the prepaid principal balance of any such LIBO Rate Advance
in any such United States Treasury obligations as a condition precedent to
receiving a prepayment premium calculated as aforesaid. The Borrower shall, upon
receipt of such certification and contemporaneously with any such prepayment of
any such LIBO Rate Advance, remit to the Agent the prepayment premium, if any,
due in connection therewith as calculated pursuant to the provisions of this
paragraph. The Agent shall not be obligated to accept any prepayment of any
LIBO Rate Advance unless it is accompanied by the prepayment premium, if any,
due in connection therewith as calculated pursuant to the provisions of this
Section.
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3.11 Indemnification. The Borrower shall indemnify the Lenders
against any loss or expense that the Lenders may sustain or incur as a
consequence of any default by the Borrower in the payment of any portion of the
Facility bearing interest at a LIBO Rate, as and when due and payable, or the
occurrence of any event specified in the provisions of this Agreement or the
Credit Documents, including, but not limited to, any loss or reasonable expense
sustained or incurred in liquidating or reemploying deposits from third parties
acquired to effect or maintain any LIBO Rate with respect to any LIBO Rate
Advance. The Agent shall provide to the Borrower a statement explaining the
amount of any such loss or expense, which statement shall be conclusive absent
manifest error.
3.12 Taxes.
3.12.1 Foreign Lender. Each Lender that is not incorporated
under the laws of the United States of America or a state thereof shall: (a)
on or before the date of any payment by the Borrower under this Agreement or
Note(s) to such Lender, deliver to the Borrower and the Agent (x) two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
or successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement and any Notes without
deduction or withholding of any United States federal income taxes and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the
case may be, certifying that it is entitled to an exemption from United States
backup withholding tax; (b) deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Borrower; and (c) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the Borrower or
the Agent. In the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, such Lender shall
(A) represent to the Borrower (for the benefit of the Borrower and the Agent)
that it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (B) agree to furnish to the Borrower, on or before the date of any
payment by the Borrower, with a copy to the Agent, two accurate and complete
original signed copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Lender's legal entitlement at the date of
such certificate to an exemption from U.S. withholding tax under the provisions
of Section 881(c) of the Internal Revenue Code with respect to payments to be
made under this Agreement and any Notes (and to deliver to the Borrower and the
Agent two further copies of such form on or before the date it expires or
becomes obsolete and after the occurrence of any event requiring a change in the
most recently provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Agent for filing and completing
such forms), and (C) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower (for the benefit
of the Borrower and the Agent) such other forms as may be reasonably required in
order to establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Agreement and any Notes.
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Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such Lender
so advises the Borrower and the Agent then such Lender shall be exempt from
such requirements. Each Person that shall become a Lender or a participant of a
Lender pursuant to this Agreement shall, upon the effectiveness of the related
transfer, be required to provide all of the forms, certifications and
statements required pursuant to this subsection (b); provided that in the case
of a participant of a Lender, the obligations of such participant of a Lender
pursuant to this subsection (b) shall be determined as if the participant of a
Lender were a Lender except that such participant of a Lender shall furnish all
such required forms, certifications and statements to the Lender from which the
related participation shall have been purchased.
3.12.2 Florida Taxes. In connection with this transaction
there may or may not be due certain documentary stamp taxes and/or intangible
taxes imposed by the State of Florida (the "Florida Taxes"). In addition to
(and not in limitation of) the indemnification with respect to tax liabilities
set forth above, the Borrower agrees to indemnify the Agent and each Lender,
their directors, officers, agents and employees from and against any and all
liability, damage, loss, cost, expense or reasonable attorney fees which may
accrue to or be sustained by the Agent, a Lender or their directors, officers,
agents or employees on account of or arising from any claim or action raised
by, filed or brought by or in the name of any Florida governmental or
administrative department with respect to non-payment of the Florida Taxes
against the Agent, a Lender, or any of their directors, officers, agents or
employees.
3.13 Interest Rate Hedges or Swaps. The Borrower agrees that it
will not enter into any interest rate hedge or exchange agreement (a "Swap")
with respect to all or any portion of the Facility without the prior written
consent of the Agent, which consent shall not be unreasonably withheld. At any
time that the Borrower desires to enter a Swap, the Borrower shall give written
notice to the Agent of such fact, which notice shall (i) be given to the Agent
not less than thirty (30) days prior to the date upon which the Borrower
proposes to enter such Swap and (ii) specify the parties to the Swap and the
terms thereof. The Agent shall notify the Borrower in writing, within twenty
(20) days after receipt of any such notice from the Borrower whether the Agent
consents to the entry of such Swap and, if the Agent does not consent, the
reasons for withholding such consent. In the event that the Agent does not
provide such notice to the Borrower within such 20-day period, the Agent shall
be deemed to have consented to the Borrower's entry into such Swap.
ARTICLE 4
Guaranty
4.1 Guaranty of Payment. Subject to Section 4.7 below, each of
the Guarantors hereby, jointly and severally, unconditionally guarantees to
each Lender and the Agent (i) the prompt payment of all obligations of the
Borrower under the Credit Documents in full when due (whether
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at stated maturity, as a mandatory prepayment, by acceleration or otherwise) and
(ii) the timely performance of all other obligations under the Credit Documents
(collectively, the "Guaranteed Obligations"). This Guaranty is a guaranty of
payment and not of collection and is a continuing guaranty and shall apply to
the Guaranteed Obligations whenever arising.
4.2 Obligations Unconditional. The obligations of the Guarantors
hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or any other agreement or instrument referred to therein, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each Guarantor agrees that this
Guaranty may be enforced by the Lenders without the necessity at any time of
resorting to or exhausting any other security or collateral and without the
necessity at any time of having recourse to the Notes or any other of the
Credit Documents or any collateral, if any, hereafter securing the Guaranteed
Obligations or otherwise and each Guarantor hereby waives the right to require
the Lenders to proceed against the Borrower or any other Person (including a
co-guarantor) or to require the Lenders to pursue any other remedy or enforce
any other right. Each Guarantor further agrees that it shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Guaranteed Obligations for amounts paid under this
Guaranty until such time as the Lenders have been paid in full, all Commitments
under the Agreement have been terminated and no Person or governmental
authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents.
Each Guarantor further agrees that nothing contained herein shall prevent the
Lenders from suing on the Notes or any of the other Credit Documents or from
exercising any other rights available to it under any of the Credit Documents,
and the exercise of any of the aforesaid rights shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the purpose
and intent of each Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances.
Neither any Guarantor's obligations under this Guaranty nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Borrower or by reason of the bankruptcy or insolvency
of the Borrower. Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice
of or proof of reliance of by the Agent or any Lender upon this Guarantee or
acceptance of this Guarantee. The Guaranteed Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Agent and the Lenders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee.
4.3 Modifications. Each Guarantor agrees that (a) all or any part
of any security now or hereafter held for the Guaranteed Obligations, if any,
may be exchanged, compromised or surrendered from time to time; (b) the Lenders
shall not have any obligation to protect, perfect, secure or insure any such
security interests, liens or encumbrances now or hereafter held, if any, for
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<PAGE> 29
the Guaranteed Obligations; (c) the time or place of payment of the Guaranteed
Obligations may be changed or extended, in whole or in part, to a time certain
or otherwise, and may be renewed or accelerated, in whole or in part; (d) the
Borrower and any other party liable for payment under the Credit Documents may
be granted indulgences generally; (e) any of the provisions of the Notes or any
of the other Credit Documents may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Borrower or any other party liable for the payment of the Guaranteed
Obligations or liable upon any security therefor may be released, in whole or
in part, at, before or after the stated, extended or accelerated maturity of
the Guaranteed Obligations, all without notice to or further assent by such
Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
4.4 Waiver of Rights. Each Guarantor expressly waives to the
fullest extent permitted by applicable law: (a) notice of acceptance of this
Guaranty by the Lenders and of all extensions of credit to the Borrower by the
Lenders; (b) presentment and demand for payment or performance of any of the
Guaranteed Obligations; (c) protest and notice of dishonor or of default
(except as specifically required in the Agreement) with respect to the
Guaranteed Obligations or with respect to any security therefor; (d) notice of
the Lenders obtaining, amending, substituting for, releasing, waiving or
modifying any security interest, lien or encumbrance, if any, hereafter
securing the Guaranteed Obligations, or the Lenders' subordinating,
compromising, discharging or releasing such security interests, liens or
encumbrances, if any; (e) all other notices to which such Guarantor might
otherwise be entitled; and (f) demand for payment under this Guaranty.
4.5 Reinstatement. The obligations of the Guarantors under this
Article 4 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies. The Guarantors agree that, as between the
Guarantors, on the one hand, and the Agent and the Lenders, on the other hand,
the Guaranteed Obligations may be declared to be forthwith due and payable as
provided in Article 9 (and shall be deemed to have become automatically due and
payable in the circumstances provided in Article 9) notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing such
Guaranteed Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or such Guaranteed
Obligations being deemed to have become
23.
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automatically due and payable), such Guaranteed Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by the
Guarantors.
4.7 Limitation of Guaranty. Notwithstanding any provision to the
contrary contained herein or in any of the other Credit Documents, to the
extent the obligations of any Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers) then the obligations of such Guarantor hereunder shall be limited to
the maximum amount that is permissible under applicable law (whether federal or
state and including, without limitation, the Bankruptcy Code).
ARTICLE 5
Representations and Warranties
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Facility available, the Borrower and, to the extent
that the following representations and warranties are applicable to the
Guarantors, the Guarantors, represent and warrant to the Agent and each of the
Lenders (which representations and warranties shall survive the delivery of the
Notes and the making of Advances) that:
5.1 Corporate Status. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has the corporate power and legal authority to own its property and
carry on its business as now being conducted and is duly qualified to do
business in every jurisdiction where qualification is necessary. Each
Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the state(s) of its formation, has the corporate
power and legal authority to own its property and carry on its business as now
being conducted and is duly qualified to do business in every jurisdiction
where qualification is necessary.
5.2 Subsidiaries. The Guarantors are the only Subsidiaries which
have, individually, total assets in excess of $5,000,000.00. The Borrower
agrees to provide to the Agent annually, simultaneously with providing the
information required pursuant to Section 6.1(a), a then current list of all
Subsidiaries and the Borrower's percentage ownership of each such Subsidiary.
5.3 Joint Ventures and Partnerships. The Borrower owns not less
than a forty-five percent (45%) interest in each of the joint ventures in which
the Borrower is involved and not less than a seventy percent (70%) interest in
the partnerships in which the Borrower is involved (such joint ventures and
partnerships being referred to collectively as the "Joint Ventures"). The
Borrower agrees to provide to the Agent annually, simultaneously with providing
the information required pursuant to Section 6.1(a), a then current list of all
Joint Ventures and the Borrower's percentage ownership of each such Joint
Venture.
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<PAGE> 31
5.4 Fictitious Names. Except for the names "Outback Steakhouse"
and "Carrabba's Italian Grill" no other fictitious or trade name(s) are
currently used by the Borrower, its Subsidiaries or the Joint Ventures as
restaurant names in the conduct of its or their businesses.
5.5 Power and Authority. Each Credit Party is authorized under
all applicable provisions of law to execute, deliver and perform pursuant to
this Agreement and the other Credit Documents, and all actions on the part of
each Credit Party required for the lawful execution, delivery and performance
of this Agreement and the other Credit Documents to which such Credit Party is
a party have been duly taken. Each of this Agreement and each of the other
Credit Documents, upon the due execution and delivery thereof, will be the
valid and enforceable instrument, obligation or agreement of the each Credit
Party executing such document in accordance with its terms, except as limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally. To the best of each Credit Party's knowledge,
neither the execution and delivery of this Agreement or the other Credit
Documents, nor the fulfillment of or compliance with their provisions and
terms, will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a violation of or default under any applicable
law, regulation, order, writ, or decree, or any agreement or instrument to
which such Credit Party is now a party, or create any security interest,
chattel mortgage, lien or other encumbrance upon any of the property or assets
of such Credit Party pursuant to the terms of any agreement or instrument to
which such Credit Party is a party or by which it is bound, except those, if
any, in favor of the Lenders expressly created by the Credit Documents.
5.6 Financial Information.
(a) The consolidated balance sheets of the Borrower
and its Consolidated Subsidiaries as of December 31, 1996 and the
related consolidated statements of income, shareholders' equity and
cash flow for the fiscal year then ended, reported on by Deloitte &
Touche, a copy of each of which has been delivered to the Agent,
fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated
results of operations and changes in financial position for such
fiscal year.
(b) The unaudited consolidated balance sheets of
the Borrower and its Consolidated Subsidiaries as of March 31, 1997 and
the related unaudited consolidated statements of income, shareholders'
equity and cash flow for the three months then ended, set forth
in the Borrower's quarterly report for the fiscal quarter ended March
31, 1997 as filed with the Securities and Exchange Commission on Form
10-Q, a copy of which has been delivered to the Agent, fairly present,
in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in
paragraph (a) of this Section, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and changes in financial
position for such three month period (subject to normal year-end
adjustments).
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(c) Since December 31, 1996, there has been no
material adverse change in the business, financial position, results
of operations or prospects of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
5.7 No Liens. There are no judgments, liens, encumbrances, or
other security interests outstanding against any Credit Party or any of such
Credit Party's property other than those disclosed to the Agent and the Lenders
in connection with the Borrower's request for the Facility.
5.8 Liabilities. No Credit Party has incurred any debts,
liabilities, or obligations other than those disclosed to the Agent and the
Lenders in connection with the Borrower's request for the Facility or those
shown on the financial statements and/or the notes thereto submitted to the
Agent by the Borrower or those incurred in the ordinary course of business
subsequent to the date of the financial statements.
5.9 Litigation. There are no investigations, actions, suits or
proceedings by any federal, state or local government body, agency or
authority, or any political subdivisions thereof, or by any Person, pending, or
to the knowledge of the Credit Parties, threatened against any of the Credit
Parties or other proceedings to which any Credit Party is a party (including
administrative or arbitration proceedings), (a) that are likely to result in
any material adverse change in, or to have any other material adverse effect
on, the business or condition, financial or otherwise, of such Credit Party, or
(b) that, whether or not a Credit Party is a party thereto, seek to restrain,
enjoin, prohibit or obtain damages or other relief with respect to the
transactions contemplated by this Agreement.
5.10 Tax Returns. Each Credit Party has filed all tax returns
required to be filed by it and has paid all taxes and assessments payable by it
that have become due, other than those not yet delinquent. Each Credit Party
has established reserves that are believed by such Credit Party to be adequate
for the payment of all federal and state income taxes not heretofore paid or
closed by applicable statute.
5.11 Contract or Restriction Affecting Credit Parties. No Credit
Party is a party to or bound by any contract or agreement or subject to any
charter or other corporate restriction that materially and adversely affects or
will materially and adversely affect the business, properties or condition,
financial or otherwise, of such Credit Party.
5.12 Patents and Trademarks. The Credit Parties own, possess or
have the right to use all patents, licenses, trademarks, trademark rights,
trade names, trade name rights, copyrights, trade secrets and proprietary and
other confidential commercial information necessary to conduct their businesses
as now conducted in all material respects, without known conflict with any
patent, license, trademark, trade name, copyright or proprietary right of any
other person, except for conflicts which do not have a materially adverse
effect on the Credit Parties or their businesses.
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5.13 Governmental Approval. Each Credit Party is in compliance
with all applicable laws and regulations of all governmental authorities,
except where the failure to so be in compliance will not materially and
adversely affect the business, properties or condition, financial or otherwise,
of such Credit Party. Except as otherwise specified herein, no written
approval of any federal, state or local governmental authority, or any
political subdivision thereof, is necessary for the Credit Parties to carry out
the terms of this Agreement or any of the other Credit Documents, and no
consents or approvals are required in the making or performance of this
Agreement or any of the other Credit Documents by the Credit Parties.
5.14 Regulation U. Except for the repurchase by the Borrower of
shares of its issued and outstanding capital stock, no part of the proceeds of
the Facility will be used to purchase or carry or to reduce or retire any loan
incurred to purchase or carry, any margin stocks (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any such
margin stocks. The Borrower is not engaged and will not engage as one of its
important activities in extending credit for the purpose of purchasing or
carrying such margin stocks. If requested by the Agent, the Borrower will
furnish to the Agent, in connection with the Facility, a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U. In addition, no part of the proceeds of the Facility will be
used for the purchase of commodity future contracts (or margins therefor for
short sales), or for any commodity not required for the normal inventory of
one or more of the Credit Parties.
5.15 Securities Law. Except for the repurchase by the Borrower of
shares of its issued and outstanding capital stock, no proceeds of the Facility
will be used to acquire any security in any transaction that is subject to
Sections 13 and 14 of the Exchange Act, as amended. The Borrower is not an
"investment company" or a company "controlled" by an "investment company"
(within the meaning of the Investment Company Act of 1940, as amended).
5.16 ERISA.
(a) All pension or welfare benefit plans within the
respective meanings of Sections 3(2) and 3(l) of ERISA to which the
Borrower is a party or to which the Borrower makes any employer
contributions with respect to employees are listed on SCHEDULE 5.16
attached hereto. None of the plans listed on SCHEDULE 5.16 is subject
to Section 412 of the Code or Title IV of ERISA. With regard to the
current and previous plan years of each plan referred to on SCHEDULE
5.16, all contributions required to meet the employer contribution
obligations of the Borrower under the terms of the plan itself, or any
applicable collective bargaining agreement, with respect to previous
plan years, have been duly made, and such plan and its related trust
have not incurred any accumulated funding deficiency (within the
meaning of Section 412(a) of the Code and Section 302 of ERISA) since
the effective date of ERISA. In addition, the Borrower has not
incurred any withdrawal liability under Title IV of ERISA with respect
to any multi-employer plan (within the meaning of Section 3(37) of
ERISA).
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(b) To the best of the Borrower's knowledge, neither
the Borrower nor any Affiliate has engaged in any "prohibited
transactions" within the meaning of Section 4975 of the Code or
Section 406 of ERISA that could subject the Borrower or such Affiliate
to the tax or penalty on prohibited transactions imposed by Section
4975 of the Code.
(c) To the best of the Borrower's knowledge, no
Reportable Event (as such term is defined in Title IV of ERISA) has
occurred with respect to, nor has there been terminated, any plan
subject to Title IV of ERISA and maintained for any employees of the
Borrower or any member of any "controlled group of corporations" (as
such term is defined in Section 1563 of the Code) of which the
Borrower is a member.
5.17 Environmental Matters.
(a) To the best of each Credit Party's knowledge,
such Credit Party is in compliance with all provisions of the
Environmental Laws, except where the failure to so be in compliance
will not materially and adversely affect the business, properties or
condition, financial or otherwise, of such Credit Party.
(b) No Credit Party has received any assessment,
notice of liability or notice of financial responsibility, and no
notice of any action, claim or proceeding to determine such liability
or responsibility, or the amount thereof, or to impose civil penalties
with respect to a site listed on any federal or state listing of sites
containing or believed to contain Hazardous Materials, and no Credit
Party has received notification that any hazardous substances (as
defined under CERCLA) that it has disposed of have been found in any
site at which any governmental agency is conducting an investigation
or other proceeding under any Environmental Law.
(c) To the best of each Credit Party's knowledge, no
part of any of the property used by any Credit Party in its business
or any building, structure or facility located thereon or improvement
thereto contains asbestos or polychlorinated biphenyls (PCBs); have
electrical transformers, fluorescent light fixture ballasts or other
equipment containing PCBs installed thereon or therein; is used for
the handling, processing, storage or disposal of Hazardous Materials;
or contain above-ground or underground storage tanks or other storage
facilities for Hazardous Materials or, if any of the foregoing
circumstances exist, the same does not and will not have a materially
adverse impact on the financial condition or business operations of the
Borrower.
(d) No excise taxes have been imposed on any Credit
Party pursuant to Section 4611, 4661 or 4681 of the Code.
5.18 No Untrue Statements. Neither this Agreement, nor any of the
other Credit Documents, nor any other agreement, report, schedule,
certification or instrument simultaneously
28.
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with the execution of this Agreement delivered to the Agent by any Credit Party
or by any officer thereof, contains any misrepresentation or untrue statement of
any material fact or omits to state any material fact necessary to make any of
such agreements, reports, schedules, certificates or instruments not misleading
in any material respect.
5.19 $7.5 Million Facility. The Borrower is in full compliance
with and not in default with respect to all of covenants, representations,
warranties and obligations set forth in the $7.5 Million Agreement, the $7.5
Million Note and all other documents relating to the $7.5 Million Facility.
ARTICLE 6
Affirmative Covenants
The Borrower and, to the extent that any of the following
affirmative covenants are applicable to the Guarantors, the Guarantors covenant
that, so long as any portion of the Advances remains unpaid and unless the
Agent and the Lenders otherwise consent in writing:
6.1 Information. The Borrower will deliver to the Agent:
(a) as soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, consolidated
balance sheets of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
income, shareholders' equity and cash flow for such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on in a manner acceptable to the
Securities and Exchange Commission by Deloitte & Touche or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45
days after the end of each quarter of each fiscal year of the
Borrower, consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income, shareholders' equity and
cash flow for such quarter and for the portion of the Borrower's
fiscal year ended at the end of such quarter, setting forth in each
case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief accounting
officer of Borrower in the form attached hereto as EXHIBIT 6.1. If
any Event of
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Default exists on the date of such certificate, such certificate
shall set forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement of
the firm of independent public accountants which reported on such
statements (i) as to whether anything has come to their attention to
cause them to believe that there existed on the date of such
statements any Event of Default and (ii) confirming the calculations
set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) forthwith upon the occurrence of any Event of
Default, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the details thereof
and the action which the Borrower is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and, unless
the securities covered thereby are held or distributed by the
Borrower, any registration statements on Form S-3 to the extent they
relate to secondary offerings or Form S-8 or their equivalents) and
annual, quarterly or other reports which the Borrower shall have filed
with the Securities and Exchange Commission including, without
limitation, Forms 10-K, 10-Q and 8-K;
(h) from time to time such additional information
regarding the financial position or business of the Borrower as the
Agent may reasonably request.
6.2 Payment of Obligations. Each Credit Party will pay and
discharge at or before maturity, all its material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, in
accordance with generally accepted accounting principles, appropriate reserves
for the accrual of any of the same.
6.3 Maintenance of Property; Insurance. Each Credit Party will
keep all property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted; will maintain either with
financially sound and reputable insurance companies or pursuant to a plan of
self-insurance established in accordance with sound and appropriate practices,
insurance on all their property in at least such amounts and against at least
such risks as are usually insured against in the same general area by companies
of established repute engaged in the same or a similar business; and will
furnish to the Agent, upon request, full information as to the insurance
carried.
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6.4 Conduct of Business and Maintenance of Existence. Each Credit
Party will preserve, renew and keep in full force and effect its corporate
existence and its rights, privileges and franchises necessary or desirable in
the normal conduct of business.
6.5 Inspection of Property, Books and Records. Each Credit Party
will keep proper books of record and account in which full, true and correct
entries in conformity with generally accepted accounting principles shall be
made of all dealings and transactions in relation to its business and
activities; and will permit representatives of the Agent, at the Agent's
expense, to visit and inspect any of its properties, to examine and make
abstracts and copies from its books and records and to discuss its affairs,
finances and accounts with its officers, employees and independent public
accountants, all at such reasonable times and as often as may reasonably be
desired.
6.6 Licenses and Permits, Etc. Each Credit Party will preserve
and keep in force all licenses, permits and franchises necessary for the proper
conduct of such Credit Party's business.
6.7 Advice Regarding Changes. Each Credit Party will inform the
Agent immediately of any material adverse changes in the financial condition of
such Credit Party.
6.8 Advice Regarding Litigation. Each Credit Party will inform
the Agent promptly of any litigation or threatened litigation which might or
could substantially affect such Credit Party's financial condition.
6.9 Maintenance of Property. Each Credit Party will maintain all
of such Credit Party's property and equipment in a state of good repair.
6.10 Further Assurances. Each Credit Party will, at its own cost
and expense, upon request of the Agent, duly execute and deliver or cause to be
duly executed and delivered to the Agent such further instruments and do and
cause to be done such further acts that may be necessary or proper in the
opinion of the Agent, reasonably exercised, to carry out more effectively the
provisions and purposes of this Agreement and the other Credit Documents.
6.11 Observe All Laws. Each Credit Party will conform to and duly
observe in all material respects all laws, regulations and other valid
requirements of any regulatory authority with respect to its properties and the
conduct of its business.
6.12 ERISA Requirement. The Borrower will comply with all
requirements of ERISA applicable to it and furnish to the Agent as soon as
possible and in any event within thirty (30) days after any officer of the
Borrower or any duly appointed administrator of any employee pension benefit
plan (as defined in ERISA) knows or has reason to know that any Reportable
Event (as defined in ERISA) with respect to any such plan has occurred, an
Officers' Certificate describing in reasonable detail such Reportable Event and
any action that the Borrower proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event given to the Pension Benefit
Guaranty Corporation, or any successor thereto, or a statement that said notice
will be filed
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with the annual report of the United States Department of Labor with respect to
such plan if such filing has been authorized.
6.13 Bank Accounts. The Borrower will maintain all operating
accounts with the Agent, except for local accounts of restaurant locations
operating outside the State of Florida.
6.14 Consolidated Tangible Net Worth. The Borrower will maintain
the Borrower's Consolidated Tangible Net Worth in an amount not less than: (i)
$300,000,000.00 for each of the second and third quarters of the Borrower's
fiscal year ending in 1997; (ii) $330,000,000.00 for each of the fourth quarter
of the Borrower's fiscal year ending in 1997 and the first, second and third
quarters of the Borrower's fiscal year ending in 1998; (iii) $375,000,000.00
for each of the fourth quarter of the Borrower's fiscal year ending in 1998 and
the first, second and third quarters of the Borrower's fiscal year ending in
1999; and (iv) $450,000,000.00 for the fourth quarter of the Borrower's fiscal
year ending in 1999, and each quarter thereafter during the remainder of the
term of the Facility. Compliance with the foregoing Consolidated Tangible Net
Worth covenant shall be measured as of the end of each fiscal quarter of the
Borrower.
6.15 Leverage Ratio. The Borrower will maintain its Leverage Ratio
at a maximum of 0.75:1.00 as of the end of each quarter during the term of this
Agreement.
6.16 Maximum Capital Expenditures. The Borrower will not expend for
all Capital Expenditures, excluding pre-opening costs, in excess of: (i)
$165,000,000.00 for the Borrower's fiscal year ending in 1997; (ii)
$170,000,000.00 for the Borrower's fiscal year ending in 1998; and (iii)
$190,000,000.00 for the Borrower's fiscal year ending in 1999. Compliance with
the foregoing covenant shall be measured as of the end of each fiscal year.
6.17 Maximum Debt to EBITDA Ratio. The Borrower will maintain its
Debt to EBITDA Ratio at a maximum of 1.50:1.00 as of the end of each quarter
during the term of this Agreement.
6.18 Additional Subsidiaries to Become Guarantors. At the time
that any Person becomes a Subsidiary of a Credit Party and such Person so
becoming a Subsidiary has total assets of $5,000,000.00 or more, the Borrower
shall so notify the Agent and promptly thereafter (but in any event within 30
days after the date thereof) shall cause such Person to (a) execute an
agreement, in form and substance satisfactory to the Agent, pursuant to which
such Person joins in this Agreement and assumes all obligations of a Guarantor
under Article 4 hereof and (b) deliver such other documentation as the Agent
may reasonably request, including, without limitation, certified resolutions
and other organizational and authorizing documents of such Person and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the joinder agreement
referred to above. Further, in the event that, at any time, the total assets
of all Subsidiaries which are not then Guarantors (the "Non-Guarantor
Subsidiaries"), in the aggregate, is equal to or greater than $15,000,000.00,
the Borrower shall so notify the Agent and promptly thereafter (but in any
event within 30 days after the date thereof) shall cause such any Non-Guarantor
Subsidiary which has total assets equal to or greater than $3,000,000.00 to
take the actions and deliver the documents required by clauses (a) and (b) of
the preceding sentence.
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ARTICLE 7
Negative Covenants
The Credit Parties agree that, so long as any portion of the Advances
remains unpaid, unless the Agent and the Required Lenders otherwise consent in
writing:
7.1 Additional Indebtedness. Except for additional indebtedness
assumed in connection with acquiring or "rolling-up" franchises and joint
ventures, no Credit Party will incur any additional indebtedness for borrowed
money, any additional contingent liabilities, or collaterally assign, mortgage,
pledge, encumber, grant any security interest in any of such Credit Party's
assets, whether now owned or hereafter acquired, except in the ordinary course
of such Credit Party's business and with the prior written consent of the
Agent, which consent will not be unreasonably withheld.
7.2 Dividends. No Credit Party will pay any dividends on any of
such Credit Party's common stock, except those dividends considered as cash
distributions to operating partners and limited partners.
7.3 Guaranty of Debt. Except for guarantees by the Borrower of
(i) a loan to a franchisee as contemplated by the $7.5 Million Agreement or
(ii) other debt extended by the Agent to Subsidiaries, Affiliates or
franchisees of the Borrower or to some other Person at the request of the
Borrower, no Credit Party will guaranty, endorse, or otherwise become surety
for or upon the obligation of any Person, except in the ordinary course of such
Credit Party's business and with the prior written consent of the Agent, which
consent will not be unreasonably withheld.
7.4 Extend Credit. No Credit Party will lend money or credit to
or make or permit to be outstanding loans or advances to officers or
shareholders of any Credit Party, except those transactions occurring in the
ordinary course of the Credit Party's business and with the prior written
consent of the Agent, which consent will not be unreasonably withheld.
7.5 Merger or Consolidation. The Borrower will not enter into any
merger or consolidation in which the Borrower is not the surviving entity.
7.6 Transfer of Assets; Other Business Changes. No Credit Party
will sell, lease, transfer, or otherwise dispose of all or any substantial part
of its assets, whether now owned or hereafter acquired, except in the limited
situations where the Borrower is exchanging common stock for joint venture
partnership interests or interests of franchisees; or change its name or any
name in which it does business; or move its principal place of business.
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ARTICLE 8
Conditions Precedent
8.1 Closing. The closing of the transactions contemplated hereby
(the "Closing") shall be held at Valdosta, Lowndes County, Georgia, on August
22, 1997, or at such other time and/or place as the parties may agree.
8.2 Conditions Precedent to the Closing. The Agent and the
Lenders shall have no obligation to close the transactions contemplated hereby
or to make any Advances to the Borrower under the Facility until the Agent has
received the items listed below and/or the events described below have
occurred, as the case may be:
(a) Credit Documents. The Credit Documents shall
have been duly executed by the Credit Parties which are party thereto
and delivered to the Agent.
(b) Resolutions. A certificate from each Credit
Party, certified by such Credit Party's duly elected or acting
corporate secretary, stating that resolutions of the Board of
Directors of such Credit Party have been duly adopted which authorize
the execution and delivery of the applicable Credit Documents by such
Credit Party's authorized officers.
(c) Certificates of Incumbency. A certificate of
incumbency for each Credit Party showing the present officers and
directors of such Credit Party and specimen signatures of said
officers and directors.
(d) Certificate of Good Standing; Articles of
Incorporation; By-laws. A certificate of good standing with respect to
each Credit Party from the Secretary of State of the state of
incorporation of such Credit Party; a certificate of such Credit
Party's authorization to transact business in the State of Florida
from the Secretary of State of Florida; and either a certificate of
duly elected or acting corporate secretary stating that the Articles
of Incorporation and By-Laws of such Credit Party which have
previously been delivered to the Agent have not be changed or amended
or, if copies of the Articles of Incorporation and By-Laws of such
Credit Party have not previously been delivered to the Agent,
certified copies of the Articles of Incorporation and By-Laws of such
Credit Party.
(e) No Adverse Change. No conditions occur or arise
regarding the financial condition of any Credit Party which the Agent
deems, in its sole discretion, to have a materially adverse impact on
the financial condition of such Credit Party and the Agent receives an
Officer's Certificate stating that no such material adverse change has
occurred.
(f) Opinion of Counsel. An opinion of legal counsel
to the Credit Parties addressed to the Agent on behalf of the Lenders
dated as of the date of the Closing, which shall cover, among other
things, the due authorization, execution, delivery, legality, binding
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effect and enforceability of the Credit Documents, in form and
substance reasonably satisfactory to the Agent.
8.3 Conditions to Advances. At the time of each Advance of a
portion of the Facility, each of the following statements shall be true in all
material respects:
(a) Notice. The Borrower shall have delivered, in
the case of any Advance other than a Swing Line Advance, a Notice of
Borrowing, duly executed and completed, by the time specified in
Section 2.1.
(b) Availability. Immediately after giving effect
to the making of an Advance, the sum of the Advances outstanding shall
not exceed the Facility Committed Amount.
(c) Representations and Warranties. All of the
representations and warranties of the Credit Parties set forth in this
Agreement or in any other of the Credit Documents shall be correct on
and as of the date of such Advance as though made on and as of such
date.
(d) No Default. Each Credit Party shall have
observed and performed in all material respects all of the terms,
conditions and agreements set forth herein or in any other Credit
Documents on its part to be observed or performed and no Event of
Default and no Default shall have occurred and be continuing.
(e) Financial Statements. All required financial
statements and other material have been delivered to the Agent by the
Borrower pursuant to Section 6.1; no material adverse changes shall
have occurred since the date of such financial statements; and no
material liabilities, contingent or otherwise, not shown on said
financial statements or the notes thereto, shall exist, except those
incurred or arising in the ordinary course of business since the end
date for the last annual accounting period of the Borrower.
(f) Litigation. There shall be no actions, suits,
proceedings or claims pending or threatened against or affecting any
Credit Party, the result of which might materially adversely affect
the respective consolidated financial condition, business or
operations of such Credit Party.
ARTICLE 9
Default
9.1 Events of Default. The occurrence of one or more of the
following events shall constitute an event of default hereunder (an "Event of
Default"):
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(a) Payments. The failure to pay within ten (10)
days after the due date any principal, interest, fees or any
other amount payable hereunder or under any of the other Credit
Documents, either by the terms hereof or thereof or otherwise as herein
or therein provided.
(b) Covenants. The Borrower shall fail to observe
or perform any covenant contained in Sections 6.14 through 6.17 of
this Agreement; or any Credit Party shall fail to observe or perform
any other covenant contained in this Agreement for a period of 30 days
after written notice thereof has been given to the applicable Credit
Party by the Agent.
(c) Representation or Warranty. Any representation
or warranty made by a Credit Party herein or in any writing furnished
in connection with or pursuant to this Agreement or any of the other
Credit Documents shall be false or misleading in any material respect
on the date upon which made or deemed reaffirmed.
(d) Other Documents. The occurrence of any default
as specified in any of the other Credit Documents and such default
shall not have been remedied (i) within the grace period, if any,
provided in such Credit Document or (ii) if no grace period is
provided in such Credit Document and such default does not relate to
the payment of money, within thirty (30) days after written notice
thereof to the applicable Credit Party from the Agent or such longer
time, not to exceed ninety (90) days, as is necessary if the Credit
Party is diligently pursuing a cure and the default is reasonably
capable of being cured within such extended period.
(e) Default under $7.5 Million Facility or Other
Obligations. An event of default shall occur under the $7.5 Million
Agreement or any other documents or instruments evidencing and/or
securing the $7.5 Million Facility or any event or condition shall
occur which (i) results in the acceleration of the maturity of or
demand on any other obligation of the Borrower to the Agent or (ii)
with the giving of notice or lapse of time or both, would enable the
holder of such obligation or any Person acting on such holder's behalf
to accelerate the maturity thereof or to make demand thereon.
(f) Liquidation; Dissolution; Voluntary Bankruptcy.
The liquidation or dissolution of a Credit Party, or the suspension of
the business of a Credit Party, or the filing by a Credit Party of a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the Bankruptcy
Code, as amended, or under any other insolvency act or law, state or
federal, now or hereafter existing, or any other action of a Credit
Party indicating its consent to, approval of or acquiescence in, any
such petition or proceeding; the application by a Credit Party for, or
the appointment by consent or acquiescence of a Credit Party of a
receiver, a trustee or a custodian of such Credit Party for all or a
substantial part of its property; the making by a Credit Party of any
assignment for the benefit of creditors; the inability of a Credit
Party or the admission by a Credit Party
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in writing of its inability to pay its debts as they mature; or a
Credit Party taking any corporate action to authorize any of the
foregoing.
(g) Involuntary Bankruptcy. The filing of an
involuntary petition against a Credit Party in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts or for any
other relief under the Bankruptcy Code, as amended, or under any other
insolvency act or law, state or federal, now or hereafter existing; or
the involuntary appointment of a receiver, a trustee or a custodian of
a Credit Party for all or a substantial part of its property; or the
issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of a Credit Party, and
the continuance of any of such events for ninety (90) days undismissed
or undischarged.
(h) Adjudication of Bankruptcy. The adjudication of
a Credit Party as bankrupt or insolvent.
(i) Order of Dissolution. The entering of any order
in any proceedings against a Credit Party decreeing the dissolution,
divestiture or split-up of such Credit Party, and such order remains
in effect for more than sixty (60) days.
(j) Reports and Certificates. Any report,
certificate, financial statement or other instrument delivered to the
Agent by or on behalf of a Credit Party pursuant to the terms of this
Agreement or the Credit Documents is false or misleading in any
material respect when made or delivered.
(k) Judgment. A final judgment (after all avenues
of appeal and all applicable appeal periods have expired), which with
other outstanding final judgments against such Credit Party exceeds an
aggregate of Five Hundred Thousand and No/100 Dollars ($500,000.00)
(net of amounts covered by insurance), shall be rendered against a
Credit Party, and if within sixty (60) days after entry thereof such
judgment shall not have been discharged, paid or bonded or execution
thereon stayed pending appeal, or if within sixty (60) days after the
expiration of any such stay such judgment shall not have been
discharged.
(l) Illegality of Agreement or the Notes. This
Agreement or the Notes shall have been held by any court of competent
jurisdiction, or by any competent regulatory authority, to be illegal,
invalid, prohibited or unenforceable in whole or in material part.
(m) Change of Control. A Change of Control of a
Credit Party shall occur without the prior written consent of the
Agent.
(n) Guaranties. The guaranty given by the Guarantors
hereunder shall cease to be in full force and effect, or any Guarantor
hereunder or any Person acting by or on
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behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty.
9.2 Remedies. Upon the occurrence of any Event of Default and at
any time thereafter unless and until such Event of Default has been waived in
writing by the Required Lenders (or the Lenders as may be required hereunder at
such time), the Agent shall be entitled to take any of the following actions,
provided the action taken by the Agent is consistent with the provisions of
Section 10.6, without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Credit Parties, except as otherwise specifically
provided for herein:
(a) Termination of Commitments and Obligation to
Make Advances. (i) For any Event of Default specified in the
subsections of Section 9.1, other than subsections (f), (g), (h) and
(i), declare the Commitments to be terminated and thereafter refuse to
make any further Advances under the Facility or (ii) for any Event of
Default specified in subsections (f), (g), (h) or (i) of Section 9.1,
the Commitments shall automatically terminate and the Lenders shall
have no obligation to make Advances under this Agreement. In the
event that the Commitments are terminated, as provided in clause (i)
or clause (ii) of the preceding sentence, the Agent shall give written
notice of such termination to the Borrower, but the failure of the
Agent to give such notice or of the Borrower to receive such notice
shall in no way obligate the Agent or the Lenders to continue making
Advances after the occurrence of an Event of Default.
(b) Acceleration and Set-off. Upon five (5) days
written notice, declare the entire principal and all interest on the
Advances and all obligations under the Credit Documents, and all other
indebtedness of the Borrower to the Agent, including without
limitation the $7.5 Million Facility, whether the Borrower's liability
for payment thereof is primary or secondary, direct or indirect, sole,
joint, several or joint and several, or whether the indebtedness is
matured or unmatured, due or to become due, fixed, absolute or
contingent, to be immediately due and payable (without presentment,
demand, protest or other notice of any kind, all of which are
expressly waived) and the Advances and all such other indebtedness
thereupon shall be and become immediately due and payable, and the
Agent may proceed to collect the same by foreclosure, at law, or as
otherwise provided in the Credit Documents and/or other instruments or
agreements signed by the Borrower or the Guarantors. In addition,
without limiting any other rights of the Agent, whenever the Agent has
the right to declare any indebtedness to be immediately due and
payable (whether or not it has so declared), each of the Agent and
each Lender may set off against the indebtedness without notice any
amounts then owed to the Borrower by the Agent or such Lender, as the
case may be, in any capacity, whether due or not due, including
without limitation deposits, stocks, bonds and other securities and
other assets held in any custodial accounts, and each of the Agent and
each Lender shall be deemed to have exercised its right to set off
immediately at the time its right to such election accrues.
(c) Cumulative Remedies. All rights, remedies or
recourse of the Agent under this Agreement, the Notes, or any other
Credit Documents, at law, in equity or
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otherwise, are cumulative, and exercisable concurrently, and may be
pursued singularly, successively or together and may be exercised as
often as occasion therefore shall arise. No act of commission or
omission by the Agent or the Lenders, including, but not limited to,
any failure to exercise, or any delay, forbearance or indulgence in the
exercise of, any right, remedy or recourse hereunder or under any other
Credit Document shall be deemed a waiver, release or modification of
that or any other right, remedy or recourse, and no single or partial
exercise of any right, remedy or recourse shall preclude the Agent or
the Lenders from any other or future exercise of the right, remedy or
recourse or the exercise of any other right, remedy or recourse. No
waiver or release of any such rights, remedies and recourse shall be
effective against the Agent or any Lender unless in writing and
manually signed by an authorized officer on the Agent's behalf or on
such Lender's behalf (as appropriate), and then only to the extent
recited therein. A waiver, release or modification with reference to
any one event shall not be construed as continuing or constituting a
course of dealing, nor shall it be construed as a bar to, or as a
waiver, release or modification of, any subsequent right, remedy or
recourse as to a subsequent event. Notwithstanding the fact that
enforcement powers reside primarily with the Agent, each Lender has, to
the extent permitted by law, a separate right of payment and shall be
considered a separate "creditor" holding a separate "claim" within the
meaning of Section 101(5) of the Bankruptcy Code or any other
insolvency statute.
(d) No Liability. Whether or not the Agent or any
Lender elects to employ any or all remedies available to it in the
event of an occurrence of an Event of Default, neither the Agent nor
any Lender shall be liable for the payment of any expenses incurred in
connection with the exercise of any remedy available to the Agent or
the Lenders or for the performance or non-performance of any
obligation of the Credit Parties.
9.3 Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Agreement, after the occurrence and during the
continuance of an Event of Default, all amounts collected or received by the
Agent or any Lender on account of amounts outstanding under any of the Credit
Documents shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent in connection with enforcing the rights of the Lenders
under the Credit Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses, (including, without limitation, reasonable attorneys'
fees) of each of the Lenders in connection with enforcing its rights
under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest
payable to the Lenders hereunder;
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FIFTH, to the payment of the outstanding principal amount of
the Advances, pro rata, as set forth below;
SIXTH, to all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (b) each of the Lenders shall receive an amount equal
to its pro rata share (based upon each Lender's Facility Commitment Percentage)
of amounts available to be applied pursuant to clauses "THIRD", "FOURTH,"
"FIFTH," and "SIXTH" above.
ARTICLE 10
Agent Provisions
10.1 Appointment. Each Lender hereby designates and appoints the
Agent as agent of such Lender to act as specified herein and the other Credit
Documents, and each such Lender hereby authorizes the Agent, as the agent for
such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein and therein, or
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any of the other Credit Documents, or shall otherwise
exist against the Agent. The provisions of this Section are solely for the
benefit of the Agent and the Lenders and none of the Credit Parties shall have
any rights as a third party beneficiary of the provisions hereof. In
performing its functions and duties under this Agreement and the other Credit
Documents, the Agent shall act solely as an agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship
of agency or trust with or for any Credit Party.
10.2 Powers of the Agent.
10.2.1 General Powers. Subject to the terms and conditions
contained herein, the Agent shall (i) act on behalf of the Lenders in connection
with the overseeing the Facility and with the receipt and collection of the
Advances and the payments to be made hereunder, (ii) act on behalf
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of the Lenders in connection with the continued servicing and day to day
administration of the Facility, and in connection with the performance of all
acts, duties, rights and obligations required of or granted to the Agent or the
Lenders under the Credit Documents and (iii) have such other powers as are
reasonably incidental to the powers specifically delegated to the Agent, as
agent for the Lenders under this Agreement and/or the Credit Documents.
10.2.2 Limitation. Agent may not, without the prior written
consent of each Lender: (i) make or consent to any change in the interest rate
payable on Advances or fees payable under this Agreement or any payment schedule
of interest or principal and interest or fees as established in this Agreement;
(ii) make or consent to any change in the Maturity Date; (iii) make or consent
to any amendments in the terms and conditions of this Agreement, the Notes or
any of the other Credit Documents; (iv) release any Guarantor from its
Guaranteed Obligations; (v) increase any Commitment or the Facility Committed
Amount; or (vi) reduce the amount of any principal, accrued fees or interest.
10.3 Exculpatory Provisions. Neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall
be (a) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection herewith or in connection with any of the
other Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any of the
Credit Parties contained herein or in any of the other Credit Documents or in
any certificate, report, document, financial statement or other written or oral
statement referred to or provided for in, or received by the Agent under or in
connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents, or
for any failure of any Credit Party to perform its obligations hereunder or
thereunder. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement, or any of the other Credit Documents or for any
representations, warranties, recitals or statements made herein or therein or
made by any Credit Party in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Agent to the
Lenders or by or on behalf of the Credit Parties to the Agent or any Lender or
be required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained herein
or therein or as to the use of the proceeds of the Advances or of the existence
or possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties. The Agent is not a trustee
for the Lenders and owe no fiduciary duty to the Lenders.
10.4 Reliance on Communications. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to any of
the Credit Parties, independent accountants and other experts selected
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by the Agent with reasonable care). The Agent may deem and treat the Lenders as
the owner of its interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Agent
in accordance with Section 11.4.2. The Agent shall be fully justified, at its
option, in failing or refusing to take any action under this Agreement or under
any of the other Credit Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or under any of the other Credit Documents
in accordance with a request of the Required Lenders (or to the extent
specifically provided in Section 10.2, above, all the Lenders) and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders (including their successors and assigns).
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has actual knowledge of such Default or Event of
Default or has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent has actual
knowledge of a Default or Event of Default or receives such a notice, the Agent
shall give prompt notice thereof to the Lenders.
10.6 Default by Borrower. If a Default or Event of Default by the
Borrower has occurred and is a non-monetary default, the Lenders agree that
the Agent may grant to the Borrower a period of up to thirty (30) days (in
addition to any cure period contained in the Credit Documents) within which to
cure such default. If the Default or Event of Default is a monetary default or
is a non-monetary default which has not been cured within applicable grace
periods, the Agent shall consult with the Lenders as to the course of action to
pursue with regard to such Default or Event of Default. After such
consultation, the Agent shall promptly propose a course of action (the "Initial
Proposal") to be taken, including but not limited to: (i) declaring an Event
of Default, terminating the Commitments, sending appropriate notices, and/or
accelerating payment under this Agreement, the Notes and/or any other Credit
Document; (ii) commencing collection proceedings against the Credit Parties or
any of them; (iii) working with the Borrower to attempt to resolve the issue;
or (iv) attempting to exercise any other rights or remedies provided under the
Credit Documents. The Initial Proposal shall be in writing and given to the
Lenders in the manner specified for giving notice hereunder. Each Lender shall
notify the Agent and the other Lenders in writing whether such Lender approves
or rejects the Initial Proposal, within ten (10) business days from such
Lender's receipt of the Initial Proposal. By making the Initial Proposal, the
Agent shall be deemed to have approved the same and the failure of a Lender to
give the notice required hereby within the time period provided shall be deemed
to be an approval of the Initial Proposal. If the Initial Proposal shall be
approved or deemed approved by the Required Lenders, the Agent shall commence
steps to carry out the Initial Proposal. If the Initial Proposal fails to
obtain approval by the Required Lenders, the Agent shall again consult with the
Lenders and the Agent and the Lenders, acting in a commercially reasonable
manner, shall attempt to obtain the approval of the Required Lenders to an
alternate course of action. If approval of the Required Lenders to an
alternate course of action is obtained,
42.
<PAGE> 49
the Agent shall commence steps to carry out the course of action so approved.
If an alternate course of action is not agreed upon by the Required Lenders
within thirty (30) calendar days of the date of the Initial Proposal, the Agent
shall, and it is hereby authorized, empowered, directed and instructed to take
any action which the Agent is authorized to take under the Credit Documents,
including, without limitation, terminating the Commitments, declaring all
amounts outstanding under the Facility to be due and payable, taking action to
collect the amounts due under the Facility, and/or taking action to enforce the
provisions of the Credit Documents and protect and preserve the respective
rights and interest of the Lenders as is authorized by the Credit Documents.
The Lenders agree that any action or inaction taken by the Agent pursuant to
this Section which is authorized by the Credit Documents shall be deemed a
reasonable course of conduct, and each Lender hereby approves, ratifies and
affirms such actions.
10.7 Consent of the Lenders. If the consent or approval of the
Lenders or the Required Lenders is required by the Agent as to any proposed
action or inaction and notice of such request is sent to the Lenders in the
manner specified in Section 11.3 hereof, consent or approval, as applicable,
shall be deemed given if no objection or response thereto is received by the
Agent within ten (10) business days of the applicable Lender's receipt of such
notice.
10.8 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent or any
Affiliate hereinafter taken, including any review of the affairs of any Credit
Party, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Credit Parties and made its own decision to make its Commitment hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, assets, property, financial or other conditions, prospects or
creditworthiness of the Credit Parties which may come into the possession of
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.9 Reimbursement for Expenses. Each Lender agrees to bear its
pro rata share of all out of pocket expenses incurred by the Agent in
connection with the administration and enforcement of the Credit Documents, to
the extent such expenses are not reimbursed by the Credit Parties. Without
limiting the foregoing, each Lender shall bear its pro rata share of all
reasonable out of
43.
<PAGE> 50
pocket costs of collection incurred by the Agent with respect to the Facility.
For the purposes hereof, out of pocket expenses shall not include the salary,
compensation or other benefit of any employee of the Agent. To the extent any
amounts paid to the Agent by a Lender as reimbursement are later paid to the
Agent by a Credit Party or recovered by the Agent from a Credit Party, the Agent
agrees to refund to such Lender its share of such amounts paid or recovered.
The Agent agrees that it is to receive no additional compensation, other than
the Administrative Fee, in connection with the routine administration of the
Facility.
10.10 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Facility Commitment Percentage (or if the Commitments have expired or
been terminated, in accordance with the respective principal amounts of
outstanding Advances and Participation Interest of the Lenders), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following payment in full of the Advances) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the repayment of the Advances and all other amounts payable hereunder
and under the other Credit Documents.
10.11 The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower or any other Credit Party as though the
Agent were not the Agent hereunder. With respect to the Advances made and all
obligations owing to it, the Agent shall have the same rights and powers under
this Agreement as any Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
10.12 Successor Agent. The Agent may, at any time, resign upon 20
days written notice to the Lenders. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 45 days after the notice of resignation, then
the retiring Agent shall select a successor Agent provided such successor is a
Lender hereunder or a commercial bank organized under the laws of the United
States of America or of any State thereof and has a combined capital and
surplus of at least $400,000,000. Upon the acceptance of any appointment as a
successor Agent hereunder, such successor Agent shall thereupon succeed to and
become vested
44.
<PAGE> 51
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations as the
Agent, as appropriate, under this Agreement and the other Credit Documents and
the provisions of this Section shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this Agreement.
10.13 The Agent's Right to Purchase Interests of Lenders. Each
Lender hereby grants to the Agent the option (the "Purchase Option") to
acquire, by purchase and assignment, in whole but not in part, such Lender's
interest in the Facility, this Agreement and the Note held by such Lender. To
exercise the Purchase Option with respect to the interest of any Lender, the
Agent shall give written notice of the Agent's exercise of the Purchase Option
(an "Exercise Notice") to such Lender (an "Assigning Lender"), which Exercise
Notice shall set forth the date upon which the Agent will purchase the Assigning
Lender's interest (the "Settlement Date"). The Settlement Date shall not be
less than five (5) days nor more than fifteen (15) days after the date of the
Exercise Notice. On the Settlement Date, (a) the Agent shall deliver to the
Assigning Lender, by wire transfer of immediately available funds, an amount in
Dollars equal to the Assigning Lender's then outstanding Advances and
Participation Interests, together with all accrued and unpaid interest thereon,
all accrued and unpaid fees, and any other amounts payable to such Lender by the
Borrower, and (b) the Assigning Lender shall deliver to the Agent (i) the Note
held by the Assigning Lender, endorsed, without recourse, to the order of the
Agent and (ii) an assignment agreement, substantially in the form attached as
EXHIBIT 11.4.2, of all of the Assigning Lender's right, title and interest in,
to and under this Agreement and the other Credit Documents. From and after the
Settlement Date, the Assigning Lender shall have no further rights or
obligations under this Agreement or the other Credit Documents and the Agent
shall be deemed to have assumed all rights and obligations of the Assigning
Lender under this Agreement and the other Credit Documents, including, without
limitation, the obligation to honor the Assigning Lender's Commitment. An
assignment pursuant to the terms of this Section shall not require the consent
of any Credit Party or any other Lender, but such assignment shall otherwise be
governed by the terms of Section 11.4.2, below.
ARTICLE 11
Miscellaneous
11.1 Waiver of Default. Subject to the provisions of Section 10.6,
the Agent may, by written notice to the Borrower at any time and from time to
time, waive any default in the performance or observation of any condition,
covenant or other term thereof or any Event of Default that shall have occurred
hereunder and its consequences. Any such waiver shall be for such period and
subject to such conditions as shall be specified in any such notice. In the
case of any such waiver, the Borrower shall be restored to its former position
hereunder and under the Credit Documents, and any Event of Default so waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Event of Default.
45.
<PAGE> 52
11.2 Amendments and Waivers. The Agent, the Required Lenders and
the Credit Parties may, subject to the provisions of Section 10.2.2, from time
to time, enter into written agreements for the purpose of adding any provision
to this Agreement or the other Credit Documents or changing in any manner the
rights of the Agent, the Lenders and/or the Credit Parties hereunder or under
the other Credit Documents. No such amendment, modification or supplement
shall be established by custom, conduct or course of dealing, but solely by an
instrument in writing duly executed by the party to be charged therewith.
11.3 Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) with receipt confirmation to the number set out below, (c)
the Banking Business Day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or (d) the third
Banking Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective parties at the
address or telecopy numbers set forth on SCHEDULE 11.3, or at such other address
as such party may specify by written notice to the other parties hereto.
11.4 Benefit of Agreement.
11.4.1 Generally. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that none of the Credit Parties may
assign and transfer any of its interests without the prior written consent of
the Lenders; and provided further that the rights of each Lender to transfer,
assign or grant participations in its rights and/or obligations hereunder shall
be limited as set forth below in subsections 11.4.2 and 11.4.3 of this Section.
Notwithstanding the above (including anything set forth in subsections 11.4.2
and 11.4.3 of this Section), nothing herein shall restrict, prevent or prohibit
any Lender from (A) pledging its Advances hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve Bank, or
(B) granting assignments or participations in such Lender's Advances and/or
Commitments hereunder to its parent company and/or to any Affiliate of such
Lender or to any existing Lender or Affiliate thereof.
11.4.2 Assignments. Each Lender may, with the prior written
consent of the Borrower and the Agent (provided that no consent of the Borrower
shall be required during the existence and continuation of an Event of
Default), which consent shall not be unreasonably withheld or delayed, assign
all or a portion of its rights and obligations hereunder pursuant to an
assignment agreement substantially in the form of EXHIBIT 11.4.2 to one or more
Eligible Assignees; provided that (i) any such assignment shall be in a minimum
aggregate amount of $5,000,000 of the Commitments and in integral multiples of
$1,000,000 above such amount (or the remaining amount of Commitments held by
such Lender) and (ii) each such assignment shall be of a constant, not varying,
percentage of all of the assigning Lender's rights and obligations under the
Commitment being assigned. Any assignment hereunder shall be effective upon
satisfaction of the conditions set forth above and delivery to the Agent of a
duly executed assignment agreement together with a
46.
<PAGE> 53
transfer fee of $5,000.00 payable to the Agent for its own account. Upon the
effectiveness of any such assignment, the assignee shall become a "Lender" for
all purposes of this Agreement and the other Credit Documents and, to the extent
of such assignment, the assigning Lender shall be relieved of its obligations
hereunder to the extent of the Advances and Commitment components being
assigned. The Borrower agrees that upon notice of any such assignment and
surrender of the appropriate Note or Notes, it will promptly provide to the
assigning Lender and to the assignee separate promissory notes in the amount of
their respective interests substantially in the form of the original Note or
Notes (but with notation thereon that it is given in substitution for and
replacement of the original Note or Notes or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.4.2, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Lender warrants that it is
the legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim and the assignee warrants that it is an Eligible
Assignee; (ii) except as set forth in clause (i) above, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any of the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit Party or the
performance or observance by any Credit Party of any of its obligations under
this Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of this
Agreement, the other Credit Documents and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will independently and
without reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Credit Documents; (vi) such assignee appoints
and authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement or any other Credit Document as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement and the other Credit Documents are required to be performed by it
as a Lender.
11.4.3 Participations. Each Lender may sell, transfer,
grant or assign participations in all or any part of such Lender's interests
and obligations hereunder; provided that (i) such selling Lender shall remain a
"Lender" for all purposes under this Agreement (such selling Lender's
obligations under the Credit Documents remaining unchanged) and the participant
shall not constitute a Lender hereunder, (ii) no such participant shall have,
or be granted, rights to approve any amendment or waiver relating to this
Agreement or the other Credit Documents except to the extent
47.
<PAGE> 54
any such amendment or waiver would (A) reduce the principal of or rate of
interest on or fees in respect of any Advances in which the participant is
participating or increase any Commitments with respect thereto, (B) postpone the
date fixed for any payment of principal (including the extension of the final
maturity of any Advances or the date of any mandatory prepayment), interest or
fees in which the participant is participating, or (C) release all or any
substantial part of the guaranties (except as expressly provided in the Credit
Documents) supporting any of the Advances or Commitments in which the
participant is participating, (iii) sub-participations by the participant
(except to an Affiliate, parent company or Affiliate of a parent company of the
participant) shall be prohibited and (iv) any such participations shall be in a
minimum aggregate amount of $5,000,000.00 of the Commitments and in integral
multiples of $1,000,000.00 in excess thereof. In the case of any such
participation, the participant shall not have any rights under this Agreement or
the other Credit Documents (the participant's rights against the selling Lender
in respect of such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all amounts payable
by the Borrower hereunder shall be determined as if such Lender had not sold
such participation; provided, however, that such participant shall be entitled
to receive additional amounts under Sections 3.6, 3.9, 3.11 and 3.12 to the same
extent that the Lender from which such participant acquired its participation
would be entitled to the benefit of such cost protection provisions.
11.5 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or the Lenders, any right, power
or privilege hereunder or under any of the other Credit Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein and in the other Credit Documents provided are
cumulative and not exclusive of any rights or remedies provided by law.
11.6 Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and other agreements made herein shall
survive the execution and delivery of this Agreement and the other Credit
Documents.
11.7 Liens, Set Off by Bank. The Credit Parties hereby grant to
each Lender a continuing lien for the Facility and all other indebtedness of
the Credit Parties to such Lender upon any and all monies and securities of the
Credit Parties and the proceeds thereof, now or hereafter held or received by
or in transit to, such Lender from or for the Credit Parties, and also upon any
and all deposits (general or special) and credits of the Credit Parties, if
any, against such Lender, at any time existing. Upon the occurrence of any
Event of Default hereunder, each Lender is hereby authorized at any time and
from time to time, without notice to the Credit Parties, to set off,
appropriate and apply any or all items hereinabove referred to against all
indebtedness of the Credit Parties to such Lender, whether under this
Agreement, or otherwise, whether now existing or hereafter arising. The liens,
set-off rights and other rights granted to the Lenders under this Section are
also hereby given by the Credit Parties to each permitted assignee of a Lender.
48.
<PAGE> 55
11.8 Defaulting Lender. Each Lender understands and agrees that if
such Lender is a Defaulting Lender then notwithstanding the provisions of
Section 11.2 it shall not be entitled to vote on any matter requiring the
consent of the Required Lenders or to object to any matter requiring the
consent of all the Lenders; provided, however, that all other benefits and
obligations under the Credit Documents shall apply to such Defaulting Lender
and no change shall be made in the amount of a Defaulting Lender's Commitment
or Facility Commitment Percentage without such Defaulting Lender's prior
written approval.
11.9 No Third Party Beneficiaries. This Agreement is a contract
among the Agent, the Lenders and the Credit Parties for their mutual benefit
and no third person shall have any right, claim or interest against any party
hereto by virtue or any provision hereof.
11.10 Florida Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
laws of the State of Florida without regard to the principles of the conflict
of laws of Florida. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the
State of Florida (including the Hillsborough County, Florida Circuit Court) or
of the United States for the Middle District of Florida, Tampa Division and, by
execution and delivery of this Agreement, each Credit Party hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit Party hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement or any other Credit Document brought in the
courts referred to in the preceding sentence and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum.
11.11 Paragraph Headings. Paragraph headings are for the purpose of
identification only and are not considered as a substantive part of this
Agreement.
11.12 Gender; Etc. Whenever the context so requires, the neuter
gender includes the feminine and/or masculine, as the case may be, and the
singular number includes the plural, and the plural number include the
singular.
11.13 Severability. Each paragraph, provision, sentence and part
thereof of this Agreement shall be deemed separate from each other paragraph,
provision, sentence or part thereof, and the invalidity or unenforceability for
any reason or to any extent of any such portion of this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
other Credit Document, or the application of such paragraph, provision,
sentence or part thereof to other persons and circumstances.
11.14 Reimbursement of Expenses. The Borrower agrees to reimburse
the Agent for all reasonable costs and out-of-pocket expenses (including
reasonable fees of attorneys) incurred in connection with the preparation,
execution, delivery, modification, waiver and amendment of this
49.
<PAGE> 56
Agreement and the other Credit Documents, and also all reasonable expenses
incurred by the Agent and the Lenders (including reasonable fees of attorneys)
in the collection of any indebtedness incurred hereunder in the event of default
by a Credit Party under any of the Credit Documents. The obligations of the
Borrower under this Section shall survive the repayment of the Facility and the
satisfaction by the Borrower of its other obligations under this Agreement and
the other Credit Documents.
11.15 Execution in Counterparts. This Agreement and the other
Credit Documents may be executed in any number of counterparts, each of which
shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same
instrument.
11.16 Confidentiality. Except for the newspaper announcement to be
published following the closing of this transaction as contemplated by the
parties, the Agent, the Lenders and the Credit Parties agree that none of them
will make any public announcement of the transactions contemplated by this
Agreement unless it first obtains the written consent of the other party with
respect to the issuance, form, content and timing of such public announcement.
The Agent and the Lenders further agree that each of them will keep confidential
all information concerning the Credit Parties, their business or financial
condition, except information which is in the public domain or enters the public
domain other than pursuant to a breach of this Agreement and information which
the Agent or a Lender is obligated to disclose pursuant to law, regulation or
legal process. The parties agree that they will keep confidential the terms of
this Agreement unless required to divulge the same under applicable law or
regulation or unless such information is disclosed in an action between the
parties.
11.17 WAIVER OF JURY TRIAL. THE CREDIT PARTIES AND ANY PERSON OR
PERSONS CLAIMING UNDER ANY CREDIT PARTY, HEREBY VOLUNTARILY AND KNOWINGLY WAIVE
ANY RIGHT ANY OF THEM MAY HAVE TO SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF
THIS AGREEMENT, THE FACILITY, THE NOTES OR ANY OF THE OTHER CREDIT DOCUMENTS,
ANY RELATED INSTRUMENT OR AGREEMENT, OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE BORROWER NOR ANY
PERSON CLAIMING UNDER THE BORROWER SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH TRIAL CANNOT
OR HAS NOT BEEN WAIVED. THE BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS
SECTION 11.17 HAVE BEEN FULLY DISCUSSED WITH THE BORROWER AND THE AGENT, THAT
THE BORROWER IS ABLY REPRESENTED BY A LICENSED ATTORNEY AT LAW IN THE
NEGOTIATION OF THIS SECTION 11.17, THAT IT BARGAINED AT ARM'S LENGTH AND IN
GOOD FAITH AND WITHOUT DURESS OF ANY KIND FOR THE TERMS AND CONDITIONS OF THIS
SECTION 11.17 AND THAT THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS.
NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION 11.17 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the Borrower, the Guarantors, the Agent and the
Lenders have caused this Agreement to be duly executed under seal by their duly
authorized officers, all as of the day and year first above written.
50.
<PAGE> 57
WITNESSES: BORROWER:
OUTBACK STEAKHOUSE, INC., a Delaware
corporation
_____________________________
By:___________________________
Name: Robert S. Merritt
_____________________________ Title: Senior Vice President
(Corporate Seal)
51.
<PAGE> 58
GUARANTORS:
OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
_____________________________
By:___________________________
Name: Robert S. Merritt
_____________________________ Title: Senior Vice President
(Corporate Seal)
CARRABBA'S ITALIAN GRILL, INC.,
a Florida corporation
_____________________________
By:___________________________
Name: Robert S. Merritt
_____________________________ Title: Senior Vice President
(Corporate Seal)
52.
<PAGE> 59
AGENT:
BARNETT BANK, N.A., a national banking
association
_____________________________
By:___________________________
Name: Lynn E. Billingsley
_____________________________ Title: Senior Vice President
WIRE TRANSFER INSTRUCTIONS:
Barnett Bank, N.A. - Tampa
Jacksonville, Florida
ABA #063000047
Attention: Commercial Loan Accounting
Reference: Outback Steakhouse, Inc.,
Loan No. 04000017808
If Questions: Call (904) 464-5054
THE SIGNATURE PAGES FOR THE LENDERS FOLLOW ON PAGES 52 - 58
53.
<PAGE> 60
LENDERS:
BARNETT BANK, N.A., a national
banking association
_____________________________
By:___________________________
Name: Lynn E. Billingsley
_____________________________ Title: Senior Vice President
WIRE TRANSFER INSTRUCTIONS:
Barnett Bank, N.A. - Tampa
Jacksonville, Florida
ABA #063000047
Attention: Commercial Loan Accounting
Reference: Outback Steakhouse, Inc.,
Loan No. 04000017808
If Questions: Call (904) 464-5054
[CREDIT AGREEMENT SIGNATURE PAGE FOR BARNETT BANK, N.A.]
54.
<PAGE> 61
THE FIRST NATIONAL BANK OF CHICAGO,
a national bank
_____________________________
By:___________________________
Name:
_____________________________ Title:
WIRE TRANSFER INSTRUCTIONS:
The First National Bank of Chicago
Chicago, Illinois
ABA# 071000013
Credit: 7521-7653 DCS Clearing Account
Attention: Yvette Thompkins
Reference: Outback Steakhouse
[CREDIT AGREEMENT SIGNATURE PAGE FOR
THE FIRST NATIONAL BANK OF CHICAGO]
55.
<PAGE> 62
HIBERNIA NATIONAL BANK, a national bank
_____________________________
By:___________________________
Name: Stephanie Freeman
_____________________________ Title: National Account Representative
WIRE TRANSFER INSTRUCTIONS:
Hibernia National Bank
New Orleans, Louisiana
ABA#065000090
Attention: Robin Abney
Credit: National Accounts, Account
Number 00520 36615
Reference: Outback Steakhouse
[CREDIT AGREEMENT SIGNATURE PAGE FOR HIBERNIA NATIONAL BANK]
56.
<PAGE> 63
SUNTRUST BANK, TAMPA BAY,
a state chartered bank
_____________________________
By:___________________________
Name:
_____________________________ Title:
WIRE TRANSFER INSTRUCTIONS:
SunTrust Bank, Tampa Bay
Tampa, Florida
ABA#063106569
Credit: Commercial Loan Operations
#9656004210
Further Credit: Outback Steakhouse, Inc.
[CREDIT AGREEMENT SIGNATURE PAGE FOR SUNTRUST BANK, TAMPA BAY.]
57.
<PAGE> 64
THE FUJI BANK AND TRUST COMPANY
_____________________________
By:___________________________
Name:
_____________________________ Title:
WIRE TRANSFER INSTRUCTIONS:
The Fuji Bank and Trust Company
New York, New York
ABA# 026008905
Attention: US Corporate
Reference: Outback Steakhouse
[CREDIT AGREEMENT SIGNATURE PAGE FOR
THE FUJI BANK AND TRUST COMPANY]
58.
<PAGE> 65
THE SUMITOMO BANK, LIMITED
_____________________________
By:___________________________
Name:
_____________________________ Title:
By:___________________________
Name:
Title:
WIRE TRANSFER INSTRUCTIONS:
Sumitomo Bank Chg1
ABA# 071001850
Attention: Loan Administration
Reference: Outback Steakhouse
[CREDIT AGREEMENT SIGNATURE PAGE FOR THE SUMITOMO BANK, LIMITED]
59.
<PAGE> 66
CRESTAR BANK, a Virginia Institution
_____________________________
By:___________________________
Name: Julian N. Holland, Jr.
_____________________________ Title: Vice President
WIRE TRANSFER INSTRUCTIONS:
Crestar Bank
Richmond, Virginia
ABA# 051000020
Attention: CCO-Special Handling-John Cary
Reference: Outback Steakhouse
[CREDIT AGREEMENT SIGNATURE PAGE FOR CRESTAR BANK]
60.
<PAGE> 67
Exhibit 2.1.2
to
Credit Agreement
NOTICE OF BORROWING
TO: BARNETT BANK, N.A., as Agent
101 East Kennedy Blvd.
Tampa, Florida 33602
RE: Credit Agreement entered into as of August __, 1997 among
Outback Steakhouse, Inc. (the "Borrower"), each of the
Subsidiaries of the Borrower, Barnett Bank, N.A., as the
Agent, and the Lenders party thereto (as the same may be
amended, modified, extended or restated from time to time, the
"Credit Agreement")
DATE: ____________, 199___
_______________________________________________________________________________
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting Advances from the
Lenders in the aggregate amount of $___________ to be funded on
____________, 199__ at the interest rate option set forth in paragraph
3 below. Subsequent to the funding of the requested Advances, the
aggregate amount of all then outstanding Advances will be
$____________, which together with the aggregate amount of outstanding
Swing Line Advances is less than or equal to the Facility Committed
Amount.
3. The interest rate option applicable to the requested Revolving Loans
shall be:
a. ________ the Prime Based Rate
b. ________ the Floating LIBO Rate
c. ________ the LIBO Rate for an Interest Period of:
____ one month
____ two months
____ three months
<PAGE> 68
____ six months
4. The representations and warranties made by the Credit Parties in the
Credit Documents are true and correct in all material respects at and
as if made on the date hereof except to the extent they expressly
relate to an earlier date.
5. As of the date hereof, no Default or Event of Default has occurred and
is continuing or would be caused by this Notice of Borrowing.
6. All conditions to the funding of the requested Advances set forth in
Section 8.3 of the Credit Agreement have occurred or been satisfied.
OUTBACK STEAKHOUSE, INC.
By: ___________________________________
Name:__________________________________
Title:_________________________________
<PAGE> 69
Exhibit 2.1.4
to
Credit Agreement
FORM OF
NOTICE OF CONTINUATION/CONVERSION
TO: BARNETT BANK, N.A., as Agent
101 East Kennedy Blvd.
Tampa, Florida 33602
RE: Credit Agreement entered into as of August __, 1997 among
Outback Steakhouse, Inc. (the "Borrower"), each of the
Subsidiaries of the Borrower, Barnett Bank, N.A., as the
Agent, and the Lenders party thereto (as the same may be
amended, modified, extended or restated from time to time, the
"Credit Agreement")
DATE: ______________, 199___
_____________________________________________________________________________
6. This Notice of Continuation/Conversion is made pursuant to the terms
of the Credit Agreement. All capitalized terms used herein unless
otherwise defined shall have the meanings set forth in the Credit
Agreement.
7. Please be advised that the Borrower is requesting that a portion of
the current outstanding advances; in the amount of $_______ currently
accruing interest at _________ be continued or converted as of
_____________ at the interest rate option set forth in paragraph 3
below.
8. The interest rate option applicable to the continuation or conversion
of all or part of the existing Advances shall be:
a. ________ the Prime Based Rate
b. ________ the Floating LIBO Rate
c. ________ the LIBO Rate for an Interest Period of:
____ one month
____ two months
____ three months
____ six months
<PAGE> 70
9. As of the date hereof, no Default or Event of Default has
occurred and is continuing or would be caused by this Notice
of Continuation/Conversion.
OUTBACK STEAKHOUSE, INC.
By: ___________________________________
Name:__________________________________
Title:_________________________________
<PAGE> 71
Schedule 2.1.6
to
Credit Agreement
REVOLVING PROMISSORY NOTE
$_________________________ _____________, 199___
FOR VALUE RECEIVED, OUTBACK STEAKHOUSE, INC., a Delaware corporation,
(the "Borrower"), hereby promises to pay to the order of ______________________
(the "Lender"), at the office of Barnett Bank, N.A. (the "Agent") as set forth
in that certain Credit Agreement entered into as of __________________, 1997
between the Borrower, each of the Subsidiaries of the Borrower, the Lenders
named therein (including the Lender) and the Agent (as modified and supplemented
and in effect from time to time, the "Credit Agreement"), the principal sum of
$________________ (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Advances made by the Lender to the Borrower under the
Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Advance, at such office, in like money and funds, for the period
commencing on the date of such Advance until such Advance shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement and
evidences Advances made by the Lender thereunder. Capitalized terms used in
this Note and not otherwise defined shall have the respective meanings assigned
to them in the Credit Agreement and the terms and conditions of the Credit
Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Advances evidenced by this Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
Advances upon the terms and conditions specified therein. In the event this
Note is not paid when due at any stated or accelerated maturity, the Borrower
agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of the LIBO
Interest Period (if applicable) of each Advance made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of
the Borrower to make a payment when due of any amount owing hereunder or under
this Note in respect of the Advances to be evidenced by this Note, and each
such recordation or endorsement shall be prima facie evidence of such
information.
<PAGE> 72
The Borrower hereby waives presentment, demand, protest, notice of
protest and any other notice with respect to this Note.
This Note shall be governed by, and construed in accordance with, the
laws of the State of Florida.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
as of the date first above written.
OUTBACK STEAKHOUSE, INC., a Delaware
corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
STATE OF __________________________________
COUNTY OF ________________________
THE FOREGOING INSTRUMENT was acknowledged before me this _____ day of
_______________, 199___, by __________________________, as ____________________
of OUTBACK STEAKHOUSE, INC., a Delaware corporation, on behalf of the
corporation. He/she is either [please check as applicable] ___ personally
known to me, or ___ presented _____________________________ as identification.
_____________________________________
Print Name: _________________________
Notary Public, State of______________
My Commission Expires:_______________
My Commission No. ___________________
<PAGE> 73
Exhibit 11.4.2
to
Credit Agreement
FORM OF
ASSIGNMENT AGREEMENT
Reference is made to that certain Credit Agreement entered into as of
August 22, 1997 (as the same has been amended, modified, extended or restated
from time to time, the "Credit Agreement") among Outback Steakhouse, Inc. (the
"Borrower"), each of the Subsidiaries of the Borrower, the Lenders identified
therein, and Barnett Bank, N.A., as the Agent. All capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.
12. The Assignor (as defined below) hereby sells
and assigns, without recourse, to the Assignee (as defined below), and the
Assignee hereby purchases and assumes, without recourse, from the Assignor,
effective as of effective date of the assignment as designated below (the
"Effective Date"), the interests set forth below (the "Assigned Interest") in
the Assignor's rights and obligations under the Credit Agreement and other
Credit Documents, including, without limitation, (a) the interests set forth
below in the Facility Commitment Percentage of the Assignor on the Effective
Date and (b) the Advances owing to the Assignor in connection with the Assigned
Interest which are outstanding on the Effective Date. The purchase of the
Assigned Interest shall be at par and periodic payments made with respect to
the Assigned Interest which (i) accrued prior to the Effective Date shall be
remitted to the Assignor and (ii) accrue from and after the Effective Date
shall be remitted to the Assignee. From and after the Effective Date, the
Assignee, if it is not already a Lender under the Credit Agreement, shall
become a "Lender" for all purposes of the Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations under the Credit Agreement.
13. The Assignor represents and warrants to the
Assignee that it is the holder of the Assigned Interest, and the Advances and
Participation Interests related thereto, and it has not previously transferred
or encumbered such Assigned Interest, Advances or Participation Interests.
14. The Assignee represents and warrants to the
Assignor that it is an Eligible Assignee.
15. This Assignment shall be effective only upon
(a) the consent of the Borrower and the Agent to the extent required under
<PAGE> 74
Section 11.4.2 of the Credit Agreement and (b) delivery to the Agent of this
Assignment Agreement together with the transfer fees, if applicable, set forth
in Section 11.4.2 of the Credit Agreement.
16. The Assignor and the Assignee confirm to and
agree with each other and the other parties to the Credit Agreement as to the
terms set forth in the second paragraph of Section 11.4.2 of the Credit
Agreement.
17. This Assignment shall be governed by and
construed in accordance with the laws of the State of Florida.
<TABLE>
<S> <C>
18. Terms of Assignment
(1) Date of Assignment: ____________
(2) Legal Name of Assignor: _____________________
(3) Legal Name of Assignee: _____________________
(4) Effective Date of Assignment: _______________
(5) Facility Commitment Percentage assigned: _________%
(6) Total Advances and Participation Interests
outstanding to Assignor as of
Effective Date: $__________
(7) Principal Amount of Advances and Participation
Interests assigned on Effective Date (the amount set
forth in (f) multiplied by the percentage set forth
in (e)): $__________
(8) Facility Committed Amount: $__________
(9) Principal Amount of Facility Committed Amount
Assigned on the Effective Date (the amount set
forth in (h) multiplied by the percentage set
forth in (e)): $__________
(10) Commitment of Assignor after Effective Date:
$__________
(11) Commitment of Assignee after Effective Date:
$__________
</TABLE>
<PAGE> 75
The terms set forth above are hereby
agreed to:
_______________________, as Assignor
By:__________________________
Name:________________________
Title:_______________________
_______________________, as Assignee
By:__________________________
Name:________________________
Title:_______________________
CONSENTED TO (if applicable):
OUTBACK STEAKHOUSE, INC.
By: ______________________________
Name:_____________________________
Title:____________________________
BARNETT BANK, N.A.,
as the Agent
By: ______________________________
Name:_____________________________
Title:____________________________
<PAGE> 76
Schedule 1.2.33
to
Credit Agreement
FACILITY COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Lender Percentage
------ ----------
<S> <C>
Barnett Bank, N.A. 24%
The First National Bank of Chicago 8%
Hibernia National Bank 16%
SunTrust Bank, Tampa Bay 14%
The Fuji Bank and Trust Company 16%
The Sumitomo Bank, Limited 12%
Crestar Bank 10%
</TABLE>
<PAGE> 77
Schedule 5.16
to
Credit Agreement
PENSION AND WELFARE BENEFIT PLANS
19. Outback Steakhouse of Florida, Inc. Salaried Employees 401(k)
Plan and Trust;
20. Outback Steakhouse of Florida, Inc. Employees' Stock Ownership
Plan;
21. Outback Steakhouse, Inc. Disability Insurance Plan;
22. Outback Steakhouse, Inc. Health Insurance and AD&D Plan; and
23. Outback Steakhouse, Inc. Section 125 Cafeteria Plan.
<PAGE> 78
Schedule 11.3
to
Credit Agreement
NOTICE ADDRESSES AND FACSIMILE NUMBERS OF PARTIES
<TABLE>
<S> <C>
Barnett Bank, N.A. The First National Bank of Chicago
101 E. Kennedy Boulevard, 5th Floor One First National Plaza
Tampa, FL 33602 Suite 0324, 10th Floor
ATTN: David A. Austin, Senior Vice President Chicago, IL 60670
Facsimile # (813) 225-8752 ATTN: Curtis A. Price, First Vice President
Facsimile # (312) 732-5296
Hibernia National Bank The Fuji Bank and Trust Company
313 Carondelet Street Two World Trade Center
New Orleans, Louisiana 70130 New York, New York 10048
ATTN: Stephanie M. Freeman, ATTN: Chigusa Tada
National Account Representative Facsimile # (212) 912-0516
Facsimile # (504) 533-5344
The Sumitomo Bank, Limited SunTrust Bank, Tampa Bay
100 South Ashley Drive, Suite 1780 401 East Jackson Street, 20th Floor
Tampa, Florida 33620 Tampa, Florida 33602
ATTN: M. Phillip Freeman, Vice President ATTN: Jason D. Lloyd, Vice President
Facsimile # (813) 229-6372 Facsimile # (813) 224-2283
Crestar Bank
919 East Main Street, 22nd Floor
Richmond, Virginia 23219
ATTN: Julian N. Holland, Jr.
Facsimile # (804) 782-5413
</TABLE>
<PAGE> 1
EXHIBIT 13.01
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
At December 31, 1997, Outback Steakhouse, Inc. and Affiliates (the "Company")
had 373 Outback Steakhouse restaurants in which it had a direct ownership
interest ("Company owned" restaurants), 72 Outback Steakhouse restaurants
operated by unaffiliated domestic franchisees, and 14 Outback Steakhouse
restaurants operated by unaffiliated international franchisees. The system also
included 49 Company owned Carrabba's Italian Grills ("Carrabba's") and 11
Carrabba's operated by joint ventures in which the Company had a 45% interest
("Development Joint Ventures").
All of the Company owned restaurants are organized as partnerships in
which the Company is a general partner. The Company's ownership interests range
from 51% to 90%, and the minority interests are owned by the restaurant managers
and area operating partners. The results of operations of Company owned
restaurants are included in the consolidated operating results of the Company.
The portion of the income attributable to the minority interests of restaurant
managers and area operating partners is eliminated in the line item in the
Company's Consolidated Statements of Income entitled "Elimination of minority
partners' interest."
The Development Joint Venture restaurants are organized as general
partnerships in which the Company owns 50% of the partnership and its joint
venture partner owns 50%. The restaurant manager of each restaurant owned by a
Development Joint Venture purchases a 10% interest in the restaurant he or she
manages. The Company is responsible for 50% of the costs of new restaurants
operated as Development Joint Ventures and the Company's joint venture partner
is responsible for the other 50%. The income derived from restaurants operated
as Development Joint Ventures is presented in the line item "Loss (income) from
operations of unconsolidated affiliates" in the Company's Consolidated
Statements of Income.
The Company derives no direct income from the operations of franchised
restaurants other than franchise fees and royalties, which are included in the
Company's revenues.
<TABLE>
<CAPTION>
SYSTEM-WIDE SALES
-------------------------
(IN THOUSANDS OF DOLLARS)
<S> <C>
91 $ 91,000
92 $ 196,000
93 $ 348,000
94 $ 557,000
95 $ 827,000
96 $1,077,000
97 $1,368,000
</TABLE>
<TABLE>
<CAPTION>
COMPANY REVENUES
-------------------------
(IN THOUSANDS OF DOLLARS)
<S> <C>
91 $ 91,000
92 $ 190,568
93 $ 336,885
94 $ 516,926
95 $ 733,692
96 $ 937,400
97 $1,151,637
</TABLE>
10
<PAGE> 2
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, (i) the percentages
which the items in the Company's Consolidated Statements of Income bear to total
revenues or restaurant sales, as indicated, and (ii) selected operating data:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
STATEMENTS OF INCOME DATA: 1997 1996 1995
<S> <C> <C> <C>
Revenues:
Restaurant sales 99.2% 99.3% 99.5%
Franchise fees 0.8 0.7 0.5
-------- ------- ------
100.0 100.0 100.0
======== ======= ======
Costs and expenses:
Cost of sales (1) 38.5 39.0 39.3
Labor and other related (1) 23.8 23.0 22.4
Other restaurant operating (1) 22.1 21.0 20.6
General and administrative 3.8 3.6 3.6
Provision for impaired assets and restaurant closings 2.3
Loss (income) from operations of unconsolidated affiliates (0.1)
Income from operations 10.2 13.9 14.6
Interest expense (0.2) (0.1) (0.2)
-------- ------- ------
Income before elimination of minority partners' interest
and provision for income taxes 10.0 13.8 14.4
Elimination of minority partners' interest 1.7 1.9 2.1
-------- ------- ------
Income before provision for income taxes 8.3 11.9 12.3
Provision for income taxes (2) 3.0 4.3 4.4
-------- ------- ------
Net income (2) 5.3% 7.6% 7.9%
======== ======= ======
SYSTEM-WIDE SALES (MILLIONS OF DOLLARS):
Outback Steakhouse restaurants
Company-owned $ 1,045 $ 892 $ 716
Domestic franchised and joint venture 181 124 82
International franchised 20 1
-------- ------- ------
$ 1,246 $ 1,017 $ 798
-------- ------- ------
Carrabba's Italian Grills
Company-owned $ 98 $ 39 $ 14
Joint venture 24 21 15
-------- ------- ------
$ 122 $ 60 $ 29
-------- ------- ------
System-wide total $ 1,368 $ 1,077 $ 827
======== ======= ======
NUMBER OF RESTAURANTS (AT END OF PERIOD):
Outback Steakhouses
Company-owned 373 318 258
Domestic franchised and joint venture 72 54 39
International franchised 14 1
-------- ------- ------
459 373 297
-------- ------- ------
Carrabba's Italian Grills
Company-owned 49 36 13
Joint venture 11 12 10
-------- ------- ------
60 48 23
-------- ------- ------
System-wide total 519 421 320
======== ======= ======
</TABLE>
(1) As a percentage of restaurant sales.
(2) Amounts are pro forma for the year ended December 31, 1995. See Note 12 of
Notes to Consolidated Financial Statements.
11
<PAGE> 3
FISCAL YEARS 1997, 1996 AND 1995
REVENUES. Total revenues increased by 22.9% in 1997 as compared with 1996, and
by 27.8% in 1996 as compared with 1995. The increases in 1997 and 1996 were
primarily attributable to the opening of new restaurants. The following table
depicts additional activities which influenced the year to year changes in
revenues:
<TABLE>
<CAPTION>
AVERAGE UNIT VOLUMES: 1997 1996 1995
<S> <C> <C> <C>
Outback Steakhouses $3,039,000 $3,122,000 $3,174,000
Carrabba's 2,134,000 1,982,000 2,013,000
OPERATING WEEKS:
Outback Steakhouses 17,654 14,943 11,934
Carrabba's 2,396 985 311
PER PERSON AVERAGE CHECKS:
Outback Steakhouses $ 16.76 $ 16.79 $ 16.58
Carrabba's 17.14 17.40 17.03
YEAR TO YEAR PERCENTAGE CHANGE:
SAME-STORE SALES:
Outback Steakhouses (0.11%) (1.11%) (0.52%)
Carrabba's 10.08% 7.47%
CUSTOMER COUNTS:
Outback Steakhouses 0.04% (2.33%) (0.74%)
Carrabba's 11.75% 5.19%
</TABLE>
COSTS AND EXPENSES. Cost of sales, consisting of food and beverage costs,
decreased by 0.5% of restaurant sales to 38.5% in 1997 as compared with 39.0% in
1996. Of the decrease, 0.2% resulted from an increase in the proportion of
Company owned Carrabba's in operation which have lower average food costs than
Outback Steakhouses. The remainder of the decrease resulted from a 1.2% menu
price increase in May 1997, and commodity cost decreases in meat, produce, and
dairy products. The decrease was partially offset by increases in the cost of
liquor and wine. Cost of sales decreased by 0.3% of restaurant sales to 39.0% in
1996 as compared with 39.3% in 1995. Of the decrease, 0.1% resulted from an
increase in the proportion of Carrabba's in operation. The remainder of the
decrease resulted from commodity cost decreases in shrimp and produce, partially
countered by price increases in meat and dairy products.
Labor and other related expenses include all direct and indirect labor
costs incurred in operations. Labor and other related expenses as a percentage
of restaurant sales increased by 0.8% to 23.8% in 1997 as compared with 23.0% in
1996. Of the increase, 0.2% was attributable to an increase in the proportion of
Carrabba's in operation which have higher average labor costs than Outback
Steakhouses. The remainder of the increase resulted from an overall increase in
wage rates for kitchen employees due to a competitive labor market, increases in
the statutory minimum wage rate, and lower average unit volumes generated by
Outback Steakhouses. Labor and other related expenses as a percentage of
restaurant sales increased by 0.6%, to 23.0%, in 1996 as compared with 22.4% in
1995. Of the increase, 0.4% was attributable to an increase in the proportion of
Carrabba's in operation. The remainder of the increase resulted from higher
labor costs in new markets, an increase in wage rates in certain markets, and an
overall increase in wage rates for kitchen employees due to a competitive labor
market.
<TABLE>
<CAPTION>
DILUTED EARNINGS PER SHARE
<S> <C> <C>
91 $0.17
92 $0.34
93 $0.53
94 $0.86
95 $1.19
96 $1.45
97 $1.27* $1.61*
</TABLE>
<TABLE>
<CAPTION>
NET INCOME
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
91 $ 6,064
92 $14,666
93 $24,926
94 $41,196
95 $57,911
96 $71,613
97 $61,452* $78,145*
</TABLE>
* Net income and earnings per share amounts for 1997 are depicted before and
after the "Provision for impaired assets and restaurant closings." See Note
14 of Notes to Consolidated Financial Statements.
12
<PAGE> 4
<TABLE>
<CAPTION>
LONG-TERM DEBT
------------------------
(IN THOUSANDS OF DOLLARS)
<S> <C>
91 $ 3,298
92 $ 5,570
93 $11,718
94 $20,699
95 $37,905
96 $47,595
97 $68,276
</TABLE>
Other restaurant operating expenses include all other unit-level operating
costs, the major components of which are operating supplies, rent, repairs and
maintenance, advertising, utilities, depreciation and amortization and other
occupancy costs. A substantial portion of these expenses are fixed or indirectly
variable. These costs as a percentage of restaurant sales increased by 1.1%, to
22.1% in 1997, as compared with 21.0% in 1996. Of the increase, 0.5% resulted
from an increase in the proportion of Carrabba's in operation which have higher
average operating expenses as a percentage of restaurant sales than Outback
Steakhouses due to lower average unit volumes. The remainder of the increase
resulted from increases in utilities costs, repairs and maintenance expenses,
and advertising spending. Other restaurant operating expenses as a percentage of
restaurant sales increased by 0.4%, to 21.0%, during 1996 as compared with 20.6%
in 1995. This increase was attributable to an increase in the proportion of
Carrabba's in operation.
General and administrative expenses increased by $9,934,000 to $43,763,000
in 1997 as compared with $33,829,000 in 1996. This increase resulted from an
increase in management training costs, additional staffs employed to manage
Outback Steakhouse international franchising operations and Carrabba's, and an
increase in overall administrative costs associated with operating additional
Outback Steakhouses. General and administrative expenses increased by
$7,654,000, to $33,829,000, in 1996 as compared with $26,175,000 in 1995. This
increase resulted from an increase in staffing employed to manage Carrabba's,
and an increase in administrative costs associated with operating additional
Outback Steakhouses.
PROVISION FOR IMPAIRED ASSETS AND RESTAURANT CLOSINGS. In the fourth
quarter of 1997, the Company recorded a pre-tax charge to earnings of
$26,001,000 which includes approximately $23,113,000 for the write down of
certain impaired assets and $2,888,000 related to restaurant closings, severance
and other costs. The write down primarily related to Carrabba's restaurant
properties, nine of which were closed during the fourth quarter of 1997 (see
Notes 2 and 14 of Notes to Consolidated Financial Statements). The Company
intends to continue developing the concept in markets where it has demonstrated
success. See "Liquidity and Capital Resources" for a discussion of the Company's
expansion strategy.
LOSS (INCOME) FROM OPERATIONS OF UNCONSOLIDATED AFFILIATES. Loss (income)
from operations of unconsolidated affiliates represents the Company's portion of
net income or loss from Carrabba's and Outback Steakhouses operated as
Development Joint Ventures. Loss from Development Joint Ventures was $467,000 in
1997 compared with $102,000 in 1996 and income of $442,000 in 1995. These
decreases were attributable to losses from Carrabba's Texas operations, and to
fewer Outback Steakhouses operating as Development Joint Ventures as a result of
the restructuring of the Company's Nevada operations in April 1996.
INCOME FROM OPERATIONS. As a result of the increase in revenues, the
changes in the relationship between revenues and expenses discussed above, the
opening of new restaurants, and the provision for impaired assets and restaurant
closings in 1997, income from operations decreased by $13,841,000 to
$117,076,000 in 1997, as compared with $130,917,000 in 1996, and increased by
$23,876,000 to $130,917,000, compared with $107,041,000 in 1995.
INTEREST EXPENSE. Interest expense was $2,489,000 in 1997 as compared with
$1,096,000 in 1996 and $1,375,000 in 1995. The year to year changes in interest
expense reflected fluctuations in interest rates on the Company's line of credit
and changes in borrowing needs as funds have been expended to finance new
restaurants. See Note 6 of Notes to Consolidated Financial Statements.
13
<PAGE> 5
ELIMINATION OF MINORITY PARTNERS' INTEREST. This line item represented the
portion of income from operations included in consolidated operating results
attributable to the ownership interests of restaurant managers and area
operating partners in Company owned restaurants. As a percentage of revenues,
these costs were 1.7%, 1.9%, and 2.1% in 1997, 1996 and 1995, respectively. The
decrease in this ratio from 1996 to 1997 reflected changes in overall restaurant
operating margins, and decreases in minority partners' ownership interests
resulting from the purchase of minority interests in the Company's South
Florida, Houston, Detroit, Washington D.C. and Carolina markets in the fourth
quarter of 1997 (See Note 11 of Notes to Consolidated Financial Statements). The
decrease in this ratio from 1995 to 1996 reflected changes in overall restaurant
operating margins combined with changes in minority partners' ownership
interests as a result of the purchase of the minority interests in the Company's
Dallas and Houston markets in 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes, in all three
years presented reflected expected income taxes at the federal statutory rate
and state income tax rates, net of the federal benefit. The effective tax rate
was 35.4% in 1997, 36% in 1996, and the effective rate for pro forma taxes was
36% in 1995. The decrease in the effective rate in 1997 resulted from an
increase in FICA tip credits.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of the Company's cash flows for the last
three fiscal years (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net cash provided by operating activities $ 123,624 $ 122,799 $ 100,758
Net cash used in investing activities (111,546) (126,631) (119,104)
Net cash provided by (used in) financing activities 12,078 (7,596) 24,063
--------- --------- ---------
Net increase (decrease) in cash $ 24,156 $ (11,428) $ 5,717
========= ========= =========
</TABLE>
The Company requires capital principally for the development of Company owned
and Development Joint Venture restaurants. Capital expenditures totalled
approximately $115,213,000, $130,987,000 and $121,552,000 in 1997, 1996 and
1995, respectively. The Company either leases its restaurants under operating
leases for periods ranging from five to twenty years or purchases free standing
restaurants where it is cost effective. As of December 31, 1997, there were
approximately 229 restaurants developed on properties which were owned by the
Company. See Note 10 of Notes to Consolidated Financial Statements.
The Company has two unsecured lines of credit totalling $132,500,000.
Approximately $4,723,000 is committed for the issuance of letters of credit,
some of which are to secure loans made by the bank to certain franchisees, and
$66,360,000 has been borrowed to finance the development of new restaurants.
The company is the guarantor of an unsecured line of credit which permits
borrowing of up to $25,000,000 for one of its franchisees. At December 31, 1997,
the borrowings totalled approximately $4,520,000. See Note 6 of Notes to
Consolidated Financial Statements.
EXPANSION STRATEGY
The Company's goal is to add new restaurants to the Outback system in each of
1998 and 1999, primarily through the development of 50 to 55 Company owned
restaurants, 15 to 20 domestic franchised restaurants and 15 to 20 international
franchised restaurants each year. The Company also intends to add 8 to 10
Carrabba's, the majority of which will be Company owned restaurants, in each of
1998 and 1999. The Company estimates that its capital expenditures for the
development of new restaurants
<TABLE>
<CAPTION>
TOTAL ASSETS
------------
(IN THOUSANDS OF DOLLARS)
<S> <C>
91 $ 48,010
92 $131,436
93 $174,794
94 $259,118
95 $372,271
96 $469,843
97 $592,780
</TABLE>
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY
-----------------------
(IN THOUSANDS OF DOLLARS)
<S> <C>
91 $ 32,769
92 $103,997
93 $139,059
94 $186,697
95 $266,764
96 $342,439
97 $434,717
</TABLE>
14
<PAGE> 6
will be approximately $100 million in each of 1998 and 1999 and intends to
finance this development with income from operations and the unused portion of
the revolving line of credit referred to above. The Company anticipates that 80%
to 90% of the Company owned restaurants to be opened in 1998 will be
free-standing units.
A variety of factors could cause the actual results and experience to
differ from the anticipated results referred to in the previous paragraph. The
Company's forward looking statements regarding its development schedule for new
restaurant openings are subject to a number of risk factors including:
(i) Ability to secure appropriate real estate sites at acceptable prices;
(ii) Ability to obtain all required governmental permits including zoning
approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which could result
in significant delays;
(iv) Ability to secure all necessary contractors and sub-contractors;
(v) Union activities such as picketing and hand billing which could delay
construction;
(vi) Weather and acts of God beyond the Company's control resulting in
construction delays.
INSURANCE
The Company retains direct liability for the first $200,000 of all individual
worker's compensation and general liability claims, and $230,000 of all
individual health insurance claims. Claims in excess of these amounts are paid
for by the respective insurance company. The Company records a liability for all
unresolved claims at the anticipated cost at the end of the period based on the
estimates produced by a third party administrator and insurance company.
YEAR 2000 ISSUE
The Company's computer systems and programs were designed in recent years, and
concerns related to the year 2000 issue were addressed at initial development.
However, the Company plans to test all systems for problems related to the year
2000 issue in 1998. The Company does not rely heavily on computer systems other
than its point of sale system for which the Company is reviewing year 2000
testing with the manufacturer. The Company also intends to review plans related
to the year 2000 testing with its other purveyors of computer systems and
related products. At this time, the Company does not believe the year 2000 issue
to be a material event or uncertainty that would cause reported financial
information to not be indicative of future operating results or financial
condition.
IMPACT OF INFLATION
The Company has not operated in a highly inflationary period and does not
believe that inflation has had a material effect on sales or expenses during the
last three years other than labor costs. The Company's restaurant operations are
subject to federal and state minimum wage laws governing such matters as working
conditions, overtime and tip credits. Significant numbers of the Company's food
service and preparation personnel are paid at rates related to the federal
minimum wage and, accordingly, increases in the minimum wage have increased the
Company's labor costs in the last two years. To the extent permitted by
competition, the Company has mitigated increased costs by increasing menu prices
and may continue to do so if deemed necessary in future years.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARD
In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards ("SFAS") 131 "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 requires disclosures of certain
information about operating segments and about products and services, geographic
areas in which the Company operates, and their major customers. The Company is
presently evaluating the effect of this new standard and the required
information, if any, will be reflected in the year ended December 31, 1998
consolidated financial statements.
15
<PAGE> 1
INDEPENDENT AUDITORS' REPORT AND EXHIBIT 13.02
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Outback Steakhouse, Inc.
Tampa, Florida
We have audited the accompanying consolidated balance sheets of Outback
Steakhouse, Inc. and Affiliates (the "Company") as of December 31, 1997 and
1996, and the related consolidated statements of income, of stockholders'
equity, and of cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Tampa, Florida
February 20, 1998
16
<PAGE> 2
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Consolidated Balance Sheets (in thousands, except per share amounts)
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 39,817 $ 15,661
Inventories 20,196 16,637
Assets held for disposal 4,681
Other current assets 15,557 10,056
--------- --------
Total current assets 80,251 42,354
PROPERTY, FIXTURES AND EQUIPMENT, NET 459,069 396,513
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES, NET 7,685 13,968
DEFERRED INCOME TAXES 8,143
OTHER ASSETS 37,632 17,008
--------- --------
$ 592,780 $469,843
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 23,726 $ 27,824
Sales taxes payable 7,252 6,027
Accrued expenses 24,011 19,208
Unearned revenue 25,086 20,334
Current portion of long-term debt 715 706
--------- --------
Total current liabilities 80,790 74,099
DEFERRED INCOME TAXES 1,141
LONG-TERM DEBT 68,276 47,595
OTHER LONG-TERM LIABILITIES 4,500 3,000
--------- --------
Total liabilities 153,566 125,835
--------- --------
COMMITMENTS AND CONTINGENCIES (Notes 6 and 10)
INTEREST OF MINORITY PARTNERS IN CONSOLIDATED PARTNERSHIPS 4,497 1,569
--------- --------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 200,000 shares and 100,000 shares
authorized; 49,250 and 48,009 shares issued; and 48,514 and 48,009
outstanding as of December 31, 1997 and 1996, respectively 492 480
Additional paid-in capital 156,655 111,941
Retained earnings 291,470 230,018
--------- --------
448,617 342,439
Less treasury stock, 736 shares at December 31, 1997, at cost (13,900)
--------- --------
Total stockholders' equity 434,717 342,439
--------- --------
$ 592,780 $469,843
========= ========
</TABLE>
See Notes to Consolidated Financial Statements.
17
<PAGE> 3
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Consolidated Statements Of Income (in thousands, except per share
amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
REVENUES $ 1,151,637 $ 937,400 $ 733,692
----------- --------- ---------
COSTS AND EXPENSES
Cost of sales 440,172 363,285 286,762
Labor and other related 272,199 214,038 163,747
Other restaurant operating 251,959 195,229 150,409
General and administrative 43,763 33,829 26,175
Provision for impaired assets and restaurant closings (Note 14) 26,001
Loss (income) from operations of unconsolidated affiliates 467 102 (442)
----------- --------- ---------
1,034,561 806,483 626,651
----------- --------- ---------
INCOME FROM OPERATIONS 117,076 130,917 107,041
INTEREST EXPENSE (2,489) (1,096) (1,375)
----------- --------- ---------
INCOME BEFORE ELIMINATION OF MINORITY PARTNERS'
INTEREST AND PROVISION FOR INCOME TAXES 114,587 129,821 105,666
ELIMINATION OF MINORITY PARTNERS' INTEREST 19,411 17,925 15,181
----------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 95,176 111,896 90,485
PROVISION FOR INCOME TAXES 33,724 40,283 29,167
----------- --------- ---------
NET INCOME $ 61,452 $ 71,613 $ 61,318
=========== ========= =========
BASIC EARNINGS PER COMMON SHARE $ 1.28 $ 1.50 $ 1.30
=========== ========= =========
BASIC WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 47,834 47,813 47,012
=========== ========= =========
DILUTED EARNINGS PER COMMON SHARE $ 1.27 $ 1.45 $ 1.25
=========== ========= =========
DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 48,505 49,289 48,877
=========== ========= =========
PRO FORMA:
PROVISION FOR INCOME TAXES 32,574
---------
NET INCOME $ 57,911
=========
BASIC EARNINGS PER COMMON SHARE $ 1.23
=========
DILUTED EARNINGS PER COMMON SHARE $ 1.19
=========
</TABLE>
See Notes to Consolidated Financial Statements.
18
<PAGE> 4
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Consolidated Statements Of Stockholders' Equity (in thousands)
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL
STOCK STOCK PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 46,599 $ 465 $ 89,145 $ 97,087 $ 186,697
Issuance of common stock 904 10 18,739 18,749
Net income 61,318 61,318
------ ------- -------- -------- --------- ---------
Balance, December 31, 1995 47,503 475 107,884 158,405 266,764
Issuance of common stock 506 5 4,057 4,062
Net income 71,613 71,613
------ ------- -------- -------- --------- ---------
Balance, December 31, 1996 48,009 480 111,941 230,018 342,439
Issuance of common stock 1,241 12 44,714 44,726
Purchase of treasury stock (736) $ (13,900) (13,900)
Net income 61,452 61,452
------ ------- -------- -------- --------- ---------
BALANCE, DECEMBER 31, 1997 48,514 $ 492 $156,655 $291,470 $ (13,900) $ 434,717
====== ======= ======== ======== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE> 5
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Consolidated Statements Of Cash Flows (in thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1997 1996 1995
<S> <C> <C> <C>
Net income $ 61,452 $ 71,613 $ 61,318
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 31,963 23,858 15,699
Amortization 12,874 11,670 10,151
Provision for impaired assets and restaurant closings 26,001
Gain from sale of investment securities (133)
Minority partners' interest in consolidated partnerships' income 19,411 17,925 15,181
Loss (income) from operations of unconsolidated affiliates 467 102 (442)
Change in assets and liabilities:
Increase in inventories (3,559) (10,163) (1,246)
(Increase) decrease in other current assets (6,326) 4,174 1,636
Increase in other assets (16,746) (12,010) (13,997)
Increase in accounts payable, sales taxes
payable and accrued expenses 1,119 15,085 7,916
Increase in unearned revenue 4,752 2,702 4,426
Increase (decrease) in other long-term liabilities 1,500 (2,000)
(Decrease) increase in deferred income taxes (9,284) (157) 249
--------- --------- ---------
Net cash provided by operating activities 123,624 122,799 100,758
--------- --------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Sales of investment securities $ 1,176 $ 5,012
Capital expenditures $(115,213) (130,987) (121,552)
Payments from unconsolidated affiliates 4,808 4,984 732
Distribution to unconsolidated affiliates (438) (312) (344)
Investments in and advances to unconsolidated affiliates (703) (1,492) (2,952)
--------- --------- ---------
Net cash used in investing activities (111,546) (126,631) (119,104)
--------- --------- ---------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Adjustments from stock transactions $ 23,558 $ 4,062 $ 18,749
Proceeds from issuance of long-term debt 39,424 48,037 35,198
Proceeds from minority partners' contributions 1,625 2,100 2,150
Distributions to minority partners' and shareholders (19,895) (21,154) (17,042)
Repayments of long-term debt (18,734) (40,641) (14,992)
Payments for purchase of treasury stock (13,900)
--------- --------- ---------
Net cash provided by (used in) financing activities 12,078 (7,596) 24,063
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 24,156 (11,428) 5,717
Cash and cash equivalents at the beginning of the year 15,661 27,089 21,372
--------- --------- ---------
Cash and cash equivalents at the end of the year $ 39,817 $ 15,661 $ 27,089
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 4,013 $ 2,419 $ 1,586
Cash paid for income taxes 35,710 53,261 29,100
Supplemental disclosures of non-cash items:
Purchase of minority partners' interest (see Note 11) $ 21,168
</TABLE>
See Notes to Consolidated Financial Statements.
20
<PAGE> 6
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Outback Steakhouse, Inc. and Affiliates (the
"Company") develops and operates casual dining restaurants. The Company's
restaurants are generally organized as partnerships, with the Company as the
general partner.
Profits and losses of each partnership are shared based on respective
partnership interest percentages, as are cash distributions and capital
contributions with certain defined exceptions.
Additional Outback Steakhouse restaurants in which the Company has no
direct investment are operated under franchise agreements.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts and operations of the Company and affiliated partnerships
in which the Company is a general partner and owns more than a 50% interest. All
material balances and transactions between the consolidated entities have been
eliminated.
The unconsolidated affiliates are accounted for using the equity method.
RECLASSIFICATION - Certain amounts shown in the 1995 and 1996 consolidated
financial statements have been reclassified to conform with the 1997
presentation.
CASH AND CASH EQUIVALENTS - Cash equivalents consist of investments which
are readily convertible to cash with maturities of three months or less.
INVENTORIES - Inventories consist of food and beverages, and are stated at
the lower of cost (first-in, first-out) or market. The Company will periodically
make advance purchases of various inventory items to ensure adequate supply or
obtain favorable pricing. At December 31, 1997 and 1996, inventories included
advance purchases of approximately $7,785,000 and $7,300,000, respectively.
PREOPENING COSTS - Preopening costs, consisting of training costs and
other direct costs related to new restaurant openings, are amortized primarily
over twelve months.
GOODWILL - Goodwill is included in the line item entitled "Other Assets"
in the Company's Consolidated Balance Sheets and is amortized using the straight
line method from 5 to 20 years. On an annual basis, the Company reviews the
recoverability of goodwill based primarily upon an analysis of undiscounted cash
flows.
UNEARNED REVENUES - Unearned revenues primarily represent the Company's
liability for gift certificates, which have been sold but not yet redeemed,
recorded at the anticipated redemption value. When gift certificates are
redeemed, the Company recognizes restaurant sales and reduces the related
deferred liability.
PROPERTY, FIXTURES AND EQUIPMENT - Property, fixtures and equipment are
stated at cost. Depreciation is computed on the straight-line method over the
following useful lives:
<TABLE>
<S> <C>
Buildings and building
improvements................ 20 to 31.5 years
Furniture and fixtures.................... 7 years
Equipment .......................... 2 to 15 years
Leasehold improvements ............. 5 to 20 years
</TABLE>
Periodically, the Company evaluates the recoverability of the net carrying
value of its property, fixtures and equipment by estimating its fair value which
is generally measured by discounting expected future cash flows at the same rate
the Company utilizes to evaluate potential investments. The Company estimates
fair value based on the best information available making whatever estimates,
judgements and projections are considered necessary. The fair value is compared
to the carrying amount in the consolidated financial statements. A deficiency in
fair value relative to the carrying amount is an indication of the need to
reduce the carrying value of the assets. If the total of future undiscounted
cash flows were less than the carrying amount of the property, fixtures and
equipment, the carrying amount is written down to the fair value, and a loss
resulting from value impairment is recognized by a charge to earnings. The
Company's accounting policy complies with Statement of Financial Accounting
Standards ("SFAS") No. 121. See Notes 2 and 14.
21
<PAGE> 7
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
CONSTRUCTION IN PROGRESS - The Company capitalizes all direct costs
incurred to construct its restaurants. Upon opening, these costs are depreciated
or amortized and charged to expense based upon their property classification.
The amount of interest capitalized in connection with restaurant construction
was $1,800,000, $1,084,000, and $400,000 in 1997, 1996 and 1995, respectively.
REVENUE RECOGNITION - The Company records revenues from normal recurring
sales upon the performance of services.
ADVERTISING COSTS - The Company's policy is to report advertising costs as
expenses in the periods in which the costs are incurred. The total amounts
charged to advertising expense were approximately $36,900,000, $28,000,000, and
$17,500,000 in 1997, 1996 and 1995, respectively.
INCOME TAXES - The Company uses the asset and liability method which
recognizes the amount of current and deferred taxes payable or refundable at the
date of the financial statements as a result of all events that have been
recognized in the financial statements as measured by the provisions of enacted
tax laws.
The minority partners' interest in affiliated partnerships includes no
provision or liability for income taxes as any tax liability related thereto is
the responsibility of the individual minority partners.
EARNINGS PER COMMON SHARE - Earnings per common share are computed in
accordance with SFAS No. 128 "Earnings Per Share", which requires companies to
present basic earnings per share and diluted earnings per share. Basic earnings
per share are computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted earnings per common
share are computed by dividing net income by the weighted average number of
shares of common stock outstanding and dilutive options outstanding during the
year.
CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimated.
2. ASSETS HELD FOR DISPOSAL
In November 1997, the Company closed nine of its 68 Carrabba's locations. The
"Assets held for disposal" recorded in the Company's Consolidated Balance Sheets
include the property, fixtures, and equipment related to the nine locations
recorded at fair market value less estimated selling costs. The loss resulting
from the deficiency in fair value relative to the carrying value of the assets
is included in the line item in the Company's Consolidated Statements of Income
entitled "Provision for impaired assets and restaurant closings." See Note 14
for a discussion of the facts and circumstances leading to the disposal and the
methods used by the Company in determining the carrying amount and fair value of
the assets.
Operating losses included in the Company's operating results attributable
to the nine locations were $1,780,000, $1,102,000, and $222,000 in 1997, 1996,
and 1995, respectively.
3. OTHER CURRENT ASSETS
Other current assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Deposits (including income tax deposits) $ 2,251 $ 755
Accounts receivable 6,466 3,144
Prepaid expenses 6,034 4,961
Other current assets 806 1,196
------- -------
$15,557 $10,056
======= =======
</TABLE>
22
<PAGE> 8
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
4. PROPERTY, FIXTURES AND EQUIPMENT, NET
Property, fixtures and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Land $ 99,774 $ 85,255
Buildings and building improvements 193,667 153,212
Furniture and fixtures 49,484 36,794
Equipment 112,537 92,800
Leasehold improvements 87,624 74,858
Construction in progress 8,768 16,838
Accumulated depreciation (92,785) (63,244)
--------- ---------
$ 459,069 $ 396,513
========= =========
</TABLE>
5. OTHER ASSETS
Other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Preopening costs, net $ 6,640 $ 8,818
Intangible assets, net 27,307 4,485
Other assets 3,685 3,705
--------- ---------
$ 37,632 $ 17,008
========= =========
</TABLE>
6. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Notes payable to banks, collateralized by property, fixtures and equipment,
interest at rates ranging from 8.825% to 9.9% at December 31, 1997 $ 1,127 $ 1,336
Notes payable to leasing companies, collateralized by equipment,
interest rates ranging from 8% to 13.2% 127
Note payable to corporation, collateralized by real estate, interest at 9.0% 344 455
Other notes payable, unsecured, interest ranging from 6.33% to 7.99% 1,160 1,063
Revolving line of credit, interest ranging from 6.53%
to 6.59% at December 31, 1997 (see below) 66,360 45,320
------- -------
68,991 48,301
Less current portion 715 706
------- -------
Long-term debt $68,276 $47,595
======= =======
</TABLE>
The Company has an unsecured revolving line of credit which permits
borrowing up to a maximum of $125,000,000 at rates ranging from 50 to 75 basis
points over the 30, 60, 90 or 180 day London Interbank Offered Rate (LIBOR)
(5.72% to 5.84% at December 31, 1997). At December 31, 1997, the unused portion
of the revolving line of credit was $58,640,000. The line matures in August
2000.
The Company has a $7,500,000 unsecured line of credit bearing interest at
rates ranging from 50 to 75 basis points over LIBOR. Approximately $4,723,000 of
the line of credit is committed for the issuance of letters of credit, $866,000
of which is to secure loans made by the bank to certain franchisees.
23
<PAGE> 9
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
The Company is the guarantor of an unsecured line of credit which permits
borrowing of up to $25,000,000, maturing in March 2002, for one of its
franchisees. At December 31, 1997, the outstanding balance was approximately
$4,520,000.
The aggregate payments of long-term debt outstanding at December 31, 1997,
for the next five years, are summarized as follows: 1998 - $715,000; 1999
- - $680,000; 2000 - $67,303,000; 2001 - $130,000; 2002 - $80,000.
The carrying amount of long-term debt approximates fair value.
7. ACCRUED EXPENSES
Accrued expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Accrued payroll $ 4,907 $ 4,624
Accrued advertising 5,527 2,876
Accrued rent 1,403 1,148
Accrued insurance 4,985 4,490
Accrued ESOP contribution 174 1,150
Accrued property taxes 3,921 2,615
Other 3,094 2,305
------- -------
$24,011 $19,208
======= =======
</TABLE>
8. STOCKHOLDERS' EQUITY
During the second quarter of 1997, the Company repurchased 735,500 shares of its
Common Stock, $.01 par value, for an aggregate purchase price of $13,900,000.
Repurchased shares are carried as treasury stock on the consolidated balance
sheet and are recorded at cost. See Note 13 for disclosures related to the
Company's Stock Option Plan.
9. INCOME TAXES
Income tax expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
Federal:
Current $ 31,010 $29,838 $23,296
Deferred (3,572) 3,765 995
-------- ------- -------
27,438 33,603 24,291
-------- ------- -------
State:
Current 6,639 6,268 4,623
Deferred (353) 412 253
-------- ------- -------
6,286 6,680 4,876
-------- ------- -------
$ 33,724 $40,283 $29,167
======== ======= =======
</TABLE>
The Company's effective tax rate differs from the federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
Income taxes at federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 4.0 3.8 3.9
Earnings not subject to corporate income taxes (3.8)
Other, net (3.6) (2.8) (2.9)
----- ----- -----
Total 35.4% 36.0% 32.2%
===== ===== =====
</TABLE>
24
<PAGE> 10
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
As discussed in Note 11, in certain periods presented the Company's net income
included earnings attributable to the Hal Smith Restaurant Group (the "Hal Smith
Group"), Garob, Inc. ("Garob"), FBS Enterprises, Inc. ("FBS"), the Fore
Management Group ("Fore Management"), and the Brenica Restaurant Group
("Brenica"). These companies had elected under Subchapter S of the Internal
Revenue Code to have their shareholders pay any federal income tax due on their
earnings. Although income prior to the mergers attributable to the merging
companies is included in the Company's consolidated financial statements, the
Company is not required to pay income taxes on the income since they are the
responsibility of the shareholders of the merging companies. See Note 12.
The income tax effects of temporary differences that give rise to
significant portions of deferred tax assets and liabilities are as follows:
DEFERRED INCOME TAX ASSETS (IN THOUSANDS):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Insurance reserves $ 3,512 $ 3,147
Advertising expense reserves 1,944 854
Intangibles 14,805 9,760
Other, net 522
------- -------
$20,783 $13,761
======= =======
</TABLE>
DEFERRED INCOME TAX LIABILITIES (IN THOUSANDS):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
<S> <C> <C>
Depreciation $10,433 $10,683
Training and other
related costs 2,207 4,219
------- -------
$12,640 $14,902
======= =======
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES - The Company leases restaurant and office facilities and
certain equipment under operating leases having terms expiring between 1998 and
2016. The restaurant facility leases primarily have renewal clauses of five to
20 years exercisable at the option of the Company. Certain of these leases
require the payment of contingent rentals based on a percentage of gross
revenues, as defined. Total rental expense for the years ended December 31,
1997, 1996 and 1995 was approximately $20,000,000, $18,353,000 and $16,054,000,
respectively, and included contingent rent of approximately $2,342,000,
$2,369,000 and $2,048,000, respectively.
Future minimum lease payments on operating leases (including leases for
restaurants scheduled to open in 1998), are as follows (in thousands):
<TABLE>
<S> <C>
1998 $ 17,001
1999 16,423
2000 15,483
2001 13,227
2002 11,154
Thereafter 34,691
---------
Total minimum lease payments $ 107,979
=========
</TABLE>
The Company has a line of credit of which approximately $866,000 is
committed to secure loans made by banks to certain franchisees. See Note 6.
The Company is subject to legal proceedings claims and liabilities which
arise in the ordinary course of business. In the opinion of management, the
amount of the ultimate liability with respect to those actions will not
materially affect the Company's financial position or results of operations.
11. BUSINESS COMBINATIONS
In December 1995, the Company issued 1,329,000 shares of Common Stock to the Hal
Smith Group, the Company's franchisee in Oklahoma, Nebraska, Arkansas, and
Kansas, in connection with the merger of the Hal Smith Group into the Company.
In 1996, the Company issued approximately 2,348,000 shares of Common Stock
to the shareholders of four of its franchisees in exchange for all of their
outstanding interests in 28 Outback Steakhouses in Ohio, Kentucky, Virginia,
Illinois, Missouri, and Tennessee. The franchise groups include Garob, FBS, Fore
Management and Brenica.
The mergers discussed above have been accounted for by the pooling of
interest method using historical amounts and the financial statements presented
herein have been restated to give retroactive effect to the mergers for the
applicable periods presented.
25
<PAGE> 11
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
In 1997, the Company issued approximately 769,000 shares of Common Stock
to five area operating partners for all of their outstanding interests in 69
Outback Steakhouses in Maryland, Michigan, New Jersey, North Carolina,
Pennsylvania, South Florida, South Carolina, Texas and Virginia. These mergers
have been accounted for by the purchase method and the related goodwill is
included in the line item entitled "Other Assets" in the Company's Consolidated
Balance Sheets.
12. PRO FORMA EARNINGS AND EARNINGS PER SHARE
As discussed in Note 9, no income tax expense has been provided in the Company's
1995 historical consolidated financial statements on income attributable to the
merging companies discussed in Note 11. Pro forma net income for 1995 includes
an adjustment to increase the provision for income taxes to reflect the
anticipated tax as if the merging companies had not elected to be taxed under
Subchapter S of the Internal Revenue Code.
13. STOCK OPTION PLAN
The Company's amended and Restated Stock Option Plan (the "Stock Option Plan")
was approved by the shareholders of the Company in April 1992, and has
subsequently been amended as deemed appropriate by the Company's Board of
Directors or shareholders. There are currently 10,000,000 shares of the
Company's Common Stock which may be issued and sold upon exercise of stock
options ("Options"). The maximum term of Options granted is ten years, and
optionees generally vest in the Options over a five year period.
The purpose of the Stock Option Plan is to attract competent personnel, to
provide long-term incentives to Directors and key employees, and to discourage
employees from competing with the Company.
Options under the Stock Option Plan may be Options which qualify under
Section 422 of the Internal Revenue Code ("Incentive Stock Options") or Options
which do not qualify under Section 422 ("Nonqualified Options"). The term of
Options granted is generally 5 years and the price cannot be less than the fair
market value of the shares covered by the Option.
At December 31, 1997, Options to purchase 7,760,128 shares of the
Company's Common Stock had been granted to employees of the Company at prices
ranging from $0.28 to $38.33 per share which was the estimated fair market value
at the time of each grant. As of December 31, 1997, Options for 1,936,439 shares
were exercisable.
Options to purchase 1,459,042, 686,756 and 1,429,000 of the Company's
Common Stock were issued to employees during 1997, 1996, and 1995 with exercise
prices ranging from $21.45 to $27.64, $25.34 to $38.33 and $23.38 to $32.15 for
each respective period.
Activity in the Company's Stock Option Plan was:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
<S> <C> <C>
Outstanding at
December 31, 1995 4,588,750 $15.90
Granted 686,756 27.87
Exercised (349,033) 17.44
Forfeited (15,699) 28.09
----------
Outstanding at
December 31, 1996 4,910,774 21.13
Granted 1,459,042 23.64
Exercised (464,229) 11.05
Forfeited (61,399) 29.69
----------
Outstanding at
December 31, 1997 5,844,188 $22.67
==========
</TABLE>
Had the compensation cost for the Company's Stock Option Plan been
determined based on the fair value at the grant dates for awards under the plan
consistent with the method of FASB Statement 123, the Company's net income and
earnings per share on a pro forma basis would have been (in thousands, except
per share data):
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
Net income $55,513 $68,154 $50,923
Basic earnings per
common share $ 1.16 $ 1.43 $ 1.08
Diluted earnings per
common share $ 1.14 $ 1.38 $ 1.04
</TABLE>
26
<PAGE> 12
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
The preceding pro forma results were calculated with the use of the Black
Scholes option-pricing model. The following assumptions were used for the years
ended December 31, 1997, 1996, 1995, respectively: (1) risk-free interest rates
of 5.45%, 6.05%, and 5.83%; (2) dividend yield of 0.0%, 0.0%, and 0.0%; (3)
expected lives of 3.5, 3.5, and 3.5 years; and (4) volatility of 25%, 25%, and
25%. Results may vary depending on the assumptions applied within the model.
14. PROVISION FOR IMPAIRED ASSETS
AND RESTAURANT CLOSINGS
In the fourth quarter of 1997, the Company recorded a provision of $26,001,000
which includes approximately $23,113,000 for the write down of certain impaired
assets and $2,888,000 related to restaurant closings, severance and other costs.
In accordance with SFAS 121, the Company identified certain long-lived
assets which are held and used in the Carrabba's restaurants as impaired. An
impairment was recognized when the future undiscounted cash flows of certain
assets were estimated to be less than the assets' related carrying value. As
such, the carrying values were written down to the Company's estimates of fair
value. Fair value was estimated utilizing the best information available making
whatever estimates, judgements, and projections were considered necessary.
15. EARNINGS PER SHARE
The Company adopted the provisions of SFAS No. 128 "Earnings Per Share," during
the fourth quarter of 1997, as required. The new standard specifies the
computation, presentation, and disclosure requirements for earnings per share.
The following table represents the computation of basic and diluted earnings per
common share as required by SFAS 128 (in thousands, except per share data).
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
Net Income $61,452 $71,613 $61,318
Basic weighted average number of common shares outstanding 47,834 47,813 47,012
Basic earnings per common share $ 1.28 $ 1.50 $ 1.30
Pro forma basic earnings per common share $ 1.23
Effect of dilutive stock options 671 1,476 1,865
Diluted weighted average number of common shares outstanding 48,505 49,289 48,877
Diluted earnings per common share $ 1.27 $ 1.45 $ 1.25
Pro forma diluted earnings per common share $ 1.19
</TABLE>
Diluted earnings per common share excludes antidilutive stock options of
approximately 2,765,000, 598,000 and 241,000, during 1997, 1996, and 1995,
respectively.
27
<PAGE> 13
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Notes to Consolidated Financial Statements
16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table presents selected quarterly financial data for the periods
indicated (in thousands, except per share data).
<TABLE>
<CAPTION>
1997 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Revenues $271,037 $287,729 $289,209 $303,662
Income from operations (see footnote 14) 32,388 35,884 36,176 12,628
Income before provision for income taxes 27,069 30,353 30,598 7,156
Net income 17,189 19,274 20,316 4,673
Basic earnings per share 0.36 0.41 0.43 0.10
Diluted earnings per share 0.35 0.40 0.42 0.10
<CAPTION>
1996 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Revenues $216,102 $236,481 $236,730 $248,087
Income from operations 31,732 33,748 31,351 34,086
Income before provision for income taxes 26,546 28,719 27,242 29,389
Net income 16,857 18,236 17,712 18,808
Basic earnings per share 0.35 0.38 0.37 0.39
Diluted earnings per share 0.34 0.37 0.36 0.38
</TABLE>
28
<PAGE> 14
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
Address for all officers: 550 North Reo Street, Suite 200, Tampa, FL 33609
[PICTURE OF OFFICERS]
<TABLE>
<CAPTION>
BOARD OF DIRECTORS
------------------
<S> <C>
Chris T. Sullivan W.R. "Max" Carey, Jr.
Chairman of the Board and President, Corporate
Chief Executive Officer Resource Development
Robert D. Basham Edward L. Flom
President and Chief Former Chairman
Operating Officer and Chief Executive Officer,
Florida Steel Corporation
J. Timothy Gannon
Sr. Vice President Nancy Schneid
Vice President, Marketing
Robert S. Merritt
Sr. Vice President, Chief Lee Roy Selmon
Financial Officer and Treasurer Associate Athletic Director
University of South Florida
John A. Brabson, Jr.
Chairman and Chief Debbi Fields Rose
Executive Officer, Founder and Former
Lykes Bros. Inc. Chairperson,
Mrs. Fields Cookies
Charles H. Bridges
Former Chairman and Toby S. Wilt
Chief Executive Officer, President, TSW
Francois L. Schwartz, Inc. Investment Company
</TABLE>
<TABLE>
<CAPTION>
OFFICERS
--------
<S> <C> <C>
Chris T. Sullivan Steven T. Shlemon Lauren C. Cooper
Chairman of the Vice President and Vice President
Board and Chief Director of Operations and Controller
Executive Officer Carrabba's Italian Grill
Dennis J. Rouse
Robert D. Basham Hugh H. Connerty, Jr. Vice President,
President and Chief President, Outback Real Estate and
Operating Officer Steakhouse International Development
J. Timothy Gannon Trudy I. Cooper Irene Wenzel
Sr. Vice President Vice President, Vice President,
Training and Development Purchasing
Robert S. Merritt
Sr. Vice President, Nancy Schneid Benjamin Novello
Chief Financial Officer Vice President, Marketing Regional Vice President,
and Treasurer Operations
Steven C. Stanley
Paul E. Avery Vice President, Mark Wibel
President, Outback Construction Regional Vice President,
Steakhouse of Florida, Inc. Operations
Joseph J. Kadow
Carl W. Sahlsten Vice President, Steve Erickson
President, Carrabba's General Counsel Regional Vice President,
Italian Grill and Secretary Operations
</TABLE>
29
[PICTURE OF OFFICERS]
<PAGE> 1
EXHIBIT 13.03
MARKET FOR THE REGISTRANT'S COMMON STOCK
The Common Stock of the Company is traded in the over-the-counter market and is
quoted on the NASDAQ National Market System under the symbol OSSI. The following
table sets forth, for the fiscal years ended December 31, 1995, 1996, and 1997,
the high and low per share prices of the Company's Common Stock as reported by
NASDAQ.
<TABLE>
<CAPTION>
1995 HIGH LOW
<S> <C> <C>
First Quarter $29.25 $22.88
Second Quarter 30.13 23.38
Third Quarter 35.50 28.50
Fourth Quarter 37.80 29.25
1996
First Quarter 40.63 29.75
Second Quarter 40.75 34.00
Third Quarter 35.00 23.00
Fourth Quarter 29.63 21.50
1997
First Quarter 27.88 18.25
Second Quarter 25.38 17.88
Third Quarter 28.75 21.88
Fourth Quarter 32.38 24.88
</TABLE>
The Company has never paid a cash dividend on its Common Stock. As a condition
of the Company's line of credit agreement (See Note 6 of Notes to Consolidated
Financial Statements), the Company is currently restricted from paying
dividends, other than in the form of partnership distributions, without the
consent of two thirds of its lenders.
As of February 5, 1998 there were approximately 2,495 registered
shareholders of record of the Company's Common Stock.
REPORTS ON FORM 10-K
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K will be furnished to any shareholder without charge upon written
request. Address to Investor Relations Department at: Outback Steakhouse, Inc.,
550 North Reo Street, Suite 200, Tampa, Florida 33609.
Stock Transfer Agent and Registrar: Bank of New York, 101 Barclay Street,
12 West, New York, NY 10286. Requests for changes and updates in shareholder
records can be made to the Bank of New York Customer Service Department at
800-524-4458.
Independent Accountants: Deloitte & Touche LLP, Tampa, Florida
COMPANY NEWS
The Company's news releases, including quarterly earnings announcements are
available through Company News-On-Call. To receive a faxed copy of recent news
releases, call 1-800-758-5804. Enter the Outback six digit code of 673313 and
the requested release will faxed within minutes of inquiry. This service is
available 24 hours a day, 7 days a week.
ANNUAL MEETING
The annual meeting of shareholders will be held on Wednesday, April 15, 1998 at
10:00 a.m. local time at the Tampa Convention Center, 333 South Franklin Street,
Tampa, Florida
30
<PAGE> 1
Exhibit 21.1
OUTBACK STEAKHOUSE, INC.
A DELAWARE CORPORATION
WHOLLY OWNED SUBSIDIARIES
MARCH 26, 1998
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY DIRECTORS OFFICERS
- ------------------ --------- --------
<S> <C> <C> <C>
Outback Steakhouse of Florida, Chris T. Sullivan Chris T. Sullivan Co-Chairman of the Board and Chief Executive
Inc. Robert D. Basham Officer
a Florida corporation J. Timothy Gannon Robert D. Basham Co-Chairman and Chief Operating Officer
550 North Reo Street, Suite 200 Robert S. Merritt J. Timothy Gannon Sr. Vice President
Tampa, Florida 33609 Robert S. Merritt Sr. Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
Paul E. Avery President
Joseph J. Kadow Vice President, General Counsel, and
Secretary
Carrabba's Italian Grill, Inc. Chris T. Sullivan Robert D. Basham Chairman of the Board and Chief Executive
a Florida corporation Robert D. Basham Officer
405 North Reo Street, Suite 210 J. Timothy Gannon Carl H. Sahlsten President
Tampa, Florida 33609 Robert S. Merritt Robert S. Merritt Sr. Vice President, Chief Financial Officer
and Treasurer
Steven T. Shlemon Vice President and Director of Operations
Joseph J. Kadow Vice President and Secretary
Outback Steakhouse Chris T. Sullivan Chris T. Sullivan Chairman of the Board and Chief Executive
International, Inc. Robert D. Basham Officer
a Florida corporation J. Timothy Gannon Robert D. Basham Chief Operating Officer
550 North Reo Street, Suite 200 Robert S. Merritt Hugh H. Connerty, Jr. President
Tampa, Florida 33609 J. Timothy Gannon Sr. Vice President
Robert S. Merritt Chief Financial Officer and Treasurer
Joseph J. Kadow Vice President and Secretary
</TABLE>
<PAGE> 1
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders of
Outback Steakhouse, Inc.
Tampa, Florida
We consent to the incorporation by reference in this Annual Report of Outback
Steakhouse, Inc., (the "Company") on Form 10-K for the year ended December 31,
1997 of our report dated February 20, 1998 on the Company's consolidated
financial statements included in Exhibit 13.02 attached to this Form 10-K.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tampa, Florida
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 39,817
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20,196
<CURRENT-ASSETS> 80,251
<PP&E> 551,854
<DEPRECIATION> 92,785
<TOTAL-ASSETS> 592,780
<CURRENT-LIABILITIES> 80,790
<BONDS> 68,276
0
0
<COMMON> 492
<OTHER-SE> 434,225
<TOTAL-LIABILITY-AND-EQUITY> 592,780
<SALES> 1,142,588
<TOTAL-REVENUES> 1,151,637
<CGS> 440,172
<TOTAL-COSTS> 964,330
<OTHER-EXPENSES> 26,001
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,489
<INCOME-PRETAX> 95,176
<INCOME-TAX> 33,724
<INCOME-CONTINUING> 61,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,452
<EPS-PRIMARY> 1.28<F1>
<EPS-DILUTED> 1.27
<FN>
<F1>AMOUNT REPRESENTS BASIC EARNINGS PER SHARE IN ACCORDANCE
WITH SFAS NO. 128 "EARNINGS PER SHARE."
</FN>
</TABLE>
